Mixed bag from the jobs report for QLD

The Labour Force data for October released this morning by the ABS showed employment up 3,700 (s.a) or 20,000 (Trend) for the nation with the headline, seasonally adjusted unemployment rate dipping to 5.4% (the Trend remained stable at 5.5%). Participation fell slightly to 65.1 (from 65.2) and this will have helped with the Unemp Rate dip despite the slower monthly employment increase. Full time employment was up a healthy 24,300 (s.a.) and is now up 297,900 for the year; or 83.8% of all employment gains.

In Queensland the story was somewhat less clear. After the decline in employment last month (down 4,400) a rebound in Oct was expected, and duly delivered with an increase of 12,600 (s.a.) or 7,900 (Trend). However, a sharpish move up in Participation (to 65.8 from 65.5) saw the headline unemployment rate lift to 6.0% s.a. (from 5.9%). The Trend unemployment rate remained static at 5.9%. The move up in Participation, while helping to push the unemployment rate higher, should be viewed as a positive; particularly given that Participation now sits at its highest level since August 2014 (if we ignore a rather bizarre plot in Jan 2016 at 66.2 which saw the headline unemployment rate that month jump to 6,5% and promptly fall to 5.5% the next!).

Employment growth in QLD is now running at a Trend rate of 4.6% y/y (the fastest state) against a national average of 2.9%. Nevertheless, while it is true that employment increase in QLD over the past year account for fully 37% of the nation’s growth (seasonally adjusted), we should also note that the state only accounted for 21% of the growth in full-time employment. In QLD full-time employment makes up less than half of employment growth this year, against the national figure of almost 84%.

The bottom line is that there is ammunition here for both Government and Opposition campaigns in the final days as we run up to Nov 25th. Expect to see Government members talking up the Trend total data (see chart below) while the Opposition will no doubt focus on the relative weakness in full-time employment.

In other news…Wages growth in QLD highest in 2 years

With most attention focused on the SSM results, the Wage Prices Index results for the Sept quarter were also announced this morning. Across the nation wages grew by 0.5% q/q for a y/y increase of 2.0% (up from 1.9% for the past few quarters but somewhat below the levels the market had been expecting). The private sector recorded annual growth at 1.9% while the public sector came in at 2.4%.

In Queensland things were rather better. Average wages rose by 2.2% for the year (which was the best result since March 2015) while private sector wages rose by 2.0% (highest since June 2015) and public sector were up by 2.8% (up from 2.4% in the previous quarter).

Beware the employment data from the Census?

Yesterday saw the release of the second tranche of Census 2016 data part of which included information relating to employment. However, we would suggest that we need to be careful when reading too much into the Census data as it relates to employment.

Employment is one of the few indicators that is measured (or at least estimated on the basis of a labour force survey) on a monthly basis by the ABS at a national, state and regional level. In addition the ABS also produce employment by industry data on a quarterly basis, also at a national, state and regional level. As regular readers will know, we have some concerns around the quality of the regional data and we therefore prefer the Conus Trend series for both the monthly Jobs data and the quarterly Industry Jobs data. Nevertheless, when we consider employment we feel confident that the ABS (and derived Conus) Trend series give us the best available indicator as to actual levels at the national, state and regional levels.

Certainly the ABS agree. To quote from their own information, provided with the Census release yesterday, “The Labour Force Survey produces the most authoritative and recent estimates of labour market information, including employment and unemployment”.

It is therefore worth considering how this data tallies with, or differs from, the Census data. And when we do that we see issues that force us to consider how much importance we should be attaching to the Census data in this area.

Employed
2011
Employed
2016
Change
11-16 %
Variance
ABS-Census %
Census ABS/Conus Census ABS/Conus Census ABS/Conus 2011 2016
Aus 10,058.3 11,222.7 10,683.8 11,941.5 +6.2 +6.4 11.6 11.8
QLD 2,039.3 2,279.7 2,136.5 2,342.4 +4.8 +2.8 11.8 9.6
RoQ 1,024.8 1,156.4 1,059.5 1,163.9 +3.4 +0.6 12.8 9.9
Cairns 102.9 114.1 106.1 109.0 +3.1 -4.5 10.9 2.7

Of particular note here, for our own area, is the fact that the Census suggests an increase of 3.1% in the number employed in Cairns SA4 over the period, while our own Conus Trend (derived from the ABS data) shows a 4.5% decline. Indeed for the Rest of Queensland as a whole the Census has a 3.4% increase while the Trend suggests virtually no change.

The Census also provides detail about industry of employment and here too we see some significant differences when considering the regional data.

  • While both Census and Trend agree that Healthcare was Cairn’s largest employment sector in August 2016, the Census suggests a 15% increase since 2011 while both the ABS annual average (-0.7%) and Conus Trend (-2.0%) have the sector falling slightly.
  • Education & Training has seen rapid growth but the Census has it running at +15.7% since 2011 while the ABS annual average suggests +112.4% and Conus Trend +81.5%
  • Accommodation & Food is an important sector for the region which the Census suggest is up 6.4% while both the ABS and Conus have it down (44% and 33.6% respectively) since 2011.
  • Manufacturing exhibits some wide variances. The Census has the sector falling by 20.1% since 2011 while the ABS annual average is up 2.6% and the Conus Trend up 39.9%. Recent rises in the sector (which are more rapidly reflected in the Trend than the annual average are likely part of the reason for the seeming paradox).
  • Despite well documented increases in Public Administration jobs, the Census has the sector in Cairns virtually unchanged while the Conus Trend estimates an 18.0% rise.
  • Retail Trade has seen employment fall across all measures since 2011 but the Census has just a 8.7% drop, the Conus Trend suggests down 20.7% and the ABS annual average is a thumping decline of 33.4%.

So who do we believe? I would suggest, as the ABS themselves do, that we focus on the ABS Labour Force data (and, where appropriate the derived Conus Trends) when we are discussing employment and industry of employment. The Census comes into its own when considering issues such as hours worked, unpaid work done and other indicators not adequately covered within the standard monthly or quarterly ABS data releases.

Another strong jobs report. QLD Trend remains positive

The ABS data for the labour market in September shows another strong result with employment up 19,800 (expectations had centred around +15K) and the unemployment rate (seasonally adjusted) falling to 5.5%. Employment growth in August was revised sharply stronger to an increase of 53,000 (originally) 27,100. So, although stronger than expected Sept now shows as the weakest month of growth in the past 7 months. Full-time employment was up 6,100 while the Participation Rate remained unchanged at 65.2 (after Aug was revised down slightly). Trend employment is now growing at 2.8% y/y.

In Queensland the headline (seasonally adjusted) numbers were not as positive with employment falling 4,400 (although full-time employment rose 3,000) and the unemployment rate rising to 5.9% (from 5.7%). However, the Trend series (less volatile and preferred as an indicator) had employment up 7,500 (the weakest month of growth this year) and the unemployment rate dropping slightly to 5.9% from 6.0% previously. Trend employment growth in Queensland now sits at a healthy 4.1% y/y.

Regional jobs data will be released next Thursday at which time we will be producing the Conus Trend Regional Jobs data.

 

Building Approvals jump in the Far North

The ABS released their (original, unadjusted) residential building approvals at the SA4 and LGA level this morning; and they reveal good news for the Far North. As always, this highly volatile data set needs to be seen through the lens of the Conus Trend to make any real sense of it.

When we consider the data at the SA4 level we see the original data for Cairns up at a more-than-9-year high. However, even when looking at the Conus Trend we see a significantly improved story. Trend approvals increase to 107 in August after July was revised sharply higher to 103. Trend residential approvals are now up 15.9% y/y; the best result since March 2015.

Unfortunately, to our south in the Townsville SA4 region things are not as rosy. Here Trend approvals fell in August to 75 after July was revised slightly lower to 77. Year-on-year Trend approvals are down 7.4%.

As the second chart below makes clear. the recent recovery in approvals across the state is coming largely from Greater Brisbane with the Rest of Queensland still lagging well behind.

We can also consider the Conus Trend data for the LGAs within the Cairns SA4 region and here we see that the improvements have been seen in Cairns Regional, Cassowary Coast Regional and Tablelands Regional Council areas. Cairns Regional Council Conus Trend approvals (incl Douglas Shire) rose to 77 in August after July was revised strongly higher to 76; year-on-year this represents a 30.3% increase. In the Cassowary Coast Regional Council (where the original data saw a higher number of approvals than in any month since June 2005) the Trend rose to 9 which is a 44.8% y/y increase. On the Tablelands (Tablelands Regional plus Mareeba Shire Councils) Trend approvals also rose to 21 after July was revised stronger; however approvals remain down 6.4% from a year ago.

In the Townsville City Council area Trend approvals fell to 69 after July was revised lower to 71; they are now down 5.5% from a year ago.

The full set of Conus Trend Residential Building Approvals for all the SA4 regions in Queensland is available for download below. Please feel free to use this data (for non-commercial purposes) but we would appreciate you acknowledging Conus when you do.

Conus Trend Regional Building Approvals QLD – Aug 2017

QLD Building Approvals grinding higher despite unit falls

The ABS data for residential building approvals for August shows that across the country approvals were up 0.4% m/m (seasonally adjusted) but remain down 15.4% y/y. The far less volatile Trend series shows approvals up 1.1% m/m and down 6.5% y/y (which is the slowest rate of decline this year).

In Queensland things look similar. Total approvals rose 13.2% m/m (seasonally adjusted) but remain down 9.6% y/y. The large monthly gain was driven by a 25.5% jump in unit approvals. The preferred Trend measure shows that over the course of the month approvals rose 1.0% with house approvals up 1.7% and units down 0.1%. For the year the Trend confirms that it’s house approvals that are driving the recovery in QLD; they are up 9.1% while unit approvals are down 21.4%.

Regional data will be released next Tuesday when we shall update our Conus Trend Approvals series for all QLD SA4 regions and the FNQ Local Councils.

 

Online Retail and the impact on regional employment

We all know that the Retail sector is facing a huge disruption in the form of online shopping. It’s been so for a while now and, with the emergence of Amazon in Australia soon, is only likely to become more pronounced.

Digging into the quarterly industry jobs (and in particular the Conus Trend Industry Jobs series which provides a more timely analysis than the original ABS data which is presented as a 4-quarters average) we can see the impact of this disruption on employment in the sector. In August we saw a total employment in the Retail Trade sector in Queensland of 250,800 (which was a decline of 400 from a year ago) but more crucially that figure represents just 10.7% of the total Queensland employment figure…which is the lowest since this data set started back in August 1999. In August 1999 that share sat at 12% (that’s a relative loss of more than 39,000 jobs in retail).

In the course of the last 18 years total jobs in the sector have increased by 56,900 with 33,700 of those coming in the Greater Brisbane area and 23,200 from the Rest of Queensland. However, in the past 6 years, as the online disruption has taken hold, we’ve seen total jobs in the sector rise just 4,900. And it would appear that the impact is being felt more keenly in the regions; Greater Brisbane has seen an increase of 14,900 jobs in that time while the Rest of Queensland has lost 10,000. If we look 4 years ago we see the sector losing jobs overall with Greater Brisbane up just 6,500 while the Rest of Queensland has fallen 15,600. 

Even when we consider the past year we see Greater Brisbane adding 5,600 new retail jobs while the regions lost 6,000. Jobs in the sector in Greater Brisbane are close to all-time highs while in the regions they are almost 16,000 below highs (about 4 years ago). The evidence appears clear; the regions are suffering far more from the online shopping disruption that the capital. It is perhaps not too hard to see why that might be the case. If access to quality, diverse and plentiful shopping (like in Greater Brisbane) is more difficult because of remoteness and size of market (like in most of the regions) then it is hardly surprising to see the traditional bricks-and-mortar stores suffering at the hands of online alternatives.

The story across the regions is not, of course, uniform but it is the case that almost every region has seen a reduction in retail sector jobs since those 2013 highs.  In the past 18 years the only two regions that have seen significant growth in retail sector jobs (despite a massive increase in employment generally) have been the Gold Coast and the Sunshine Coast.

The continued disruption of the retail sector, and the inevitable impact that will have on retails jobs, appears destined to impact the regions to a far greater extent than it does the Greater Brisbane area. 

More bad news for TNQ in the National Visitor Survey

The June quarter National Visitor Survey from Tourism Research Australia was released this morning (see here for full details), and it confirms the deteriorating story for the region we’ve been discussing for some time (see commentary from last quarter).

Across the nation domestic overnight visits rose 5.2% y/y and were up 6.2% in Queensland. However, in our own region TNQ saw a decline of 4.0%. Of even greater concern is the fact that expenditure from those overnight visitors fell by 9.1% (which is more than a 10% decline when considered in real, inflation-adjusted terms). The average number of nights also fell from 5.11 nights year ago to 4.89 nights now. TNQ now accounts for just 1.93% of all Australian domestic overnight visits; its lowest share of the market since the post-Yasi period in 2011.

 

Domestic day-trips fared somewhat better and were up 2.6% y/y with expenditure up 0.8% y/y. However, this sector accounts for just 12% of total domestic expenditure in the region.

Overall total domestic expenditure (for both overnight and day trips) in TNQ fell 8.0% in the year to June 2017. With international expenditure in the region also falling slightly in June (down 0.4% y/y) despite the solid pick-up in international tourist numbers, we see total visitor expenditure in the region falling by 5.6% (or closer to 7.5% in real terms) over the year. This is a reduction in visitor spending of almost $200 million over the past 12 months and would go a long way to explaining the seeming disconnect between the “booming” tourism numbers being recorded and the reality on the ground for many operators in the Far North.

 

Strong jobs growth. QLD strongest growth since GFC

The ABS data for Labour Force in August has shown a very strong growth in employment (up 54,200, seasonally adjusted) smashing market expectations of a 17,500 rise.  Back months were also revised higher. Employment is now up 325,600 in the past 12 months. Full-time employment reversed a decline in July to rise by 40,100 and is now up 251,200 (or 77% of employment growth). The seasonally adjusted unemployment rate now sits at 5.6% (which is down from 5.7% last month, although this was only revised up from 5.6% last week during an ABS rebenchmarking exercise!).

The less volatile Trend series shows employment up 27,100 in August (up 307,300 for the year). The Trend unemployment rate was stable at 5.6%. With Participation also increasing by 0.2 ppts there can be little doubt these are strong numbers.

Queensland too saw some strong numbers. Seasonally adjusted employment was up 16,700 (after June was revised higher) with full-time employment up 14,700. Over the course of the past 12 months employment is up 95,400 although only 19.5% of those were full-time. The headline unemployment rate has fallen sharply to 5.7% as Participation remained unchanged. The Trend series shows employment up 10,600 for the month and 87,200 for the year with the Trend unemployment rate falling to 6.0% (after July was revised down to 6.1% from 6.3%).

As the chart below makes clear, the last few months have been good ones for the QLD labour market as a whole although there will still be concern at the low number of full-time positions being created. However, with annual employment growth of 3.7% (and 3.2% last month) this is the strongest period of growth in QLD employment since the GFC. A government considering the timing of an election are likely looking at these numbers with a certain amount of pleasure.

Regional labour force data will be released by the ABS next Thursday at which point we will be updating our Conus Jobs Trend and quarterly Conus Industry Jobs Trend series

 

GDP +0.8% q/q and +1.8% y/y. Queensland doing much better

The GDP data for the second quarter has shown a solid rebound from the weak data last quarter and is broadly in line with market expectations. On a seasonally adjusted basis GDP rose 0.8% for the quarter, or 1.8% from the same time a year ago. This brings the cumulative increase for the 2016-17 financial year to a 2.0% increase, which is the slowest pace of growth since the beginning of 2010.

The stronger growth this quarter can be posted to a solid increase in Public capital formation (which added 0.6 ppts) and net exports which added another 0.4 ppts. Inventories detracted 0.6 ppts.

While household consumption, the largest component of GDP, rose 0.7% q/q (and contributed 0.4 ppts to GDP growth) this was due to a further decline in the household savings rate, which has fallen to 4.6%, its lowest level since the pre-GFC levels of 2008. In the face of weak income growth households are simply running down savings to maintain consumption levels.

The less volatile Trend series shows growth at +0.7% (after some upward revisions to previous months) with annual growth at just +2.1%, the weakest result since Q2 2010.

In Queensland we see State Final Demand (which does not include the State’s strong export sector) up a solid 1.1% q/q (after Q1 was revised up from unchanged to +0.2%). Year on year growth is now running at +2.8% which is the best result in 5 years.

In Trend terms State Final Demand rose 0.7% q/q and as the second chart below shows is being kept positive by the impact of Public sector spending (most notably public CAPEX which is up 4.4% q/q). Private CAPEX data shows a 0.3% q/q increase and also saw previous quarters revised from slight falls to small rises.

Today’s data is a strongly positive sign for the State’s economy. Particularly when we combine this result with the signs of a solidly performing export sector which is likely to see Gross State Product data (when we finally get it) looking much healthier. For a government considering when to call an election this data should be a welcome addition.