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. 

Cairns Trend unemployment rate lifts to 5.6%

Today saw the release of the August original, unadjusted labour force data for the SA4 regions from the ABS. As always, we need to consider this highly volatile series in light of the Conus Trend.

In Cairns we see the headline Trend unemployment rate lift slightly to 5.6% (after July was revised up to 5.3%) despite another small increase in Trend employment (up just 100). As we have been saying for a few months, we could not see the Trend unemployment rate in Cairns falling much further while the Trend Participation Rate continued to edge higher (as it has again this month to 62.9). With more people entering the labour market it is unrealistic to expect the Trend unemployment rate to continue falling quite so spectacularly so this month’s slight reversal is very much in line with what we have been expecting to see for some time.

Over the course of the year we have seen 10,300 new employed positions added with an impressive 9,800 of those being full-time. Indeed this month’s data shows a healthy 800 lift in full-time positions being largely offset by a similar decline in part-time.

Youth Trend unemployment has also lifted slightly this month to 14.1% which is a little above the average for the Rest of Queensland, but is still well down from a year ago when it sat at 26.4%.

Townsville too sees a slight reverse from earlier lows; although here there remains plenty of scope for falls yet to come. Trend jobs increased by another 600 in August (all of which were full-time) but the sharp increase in Trend Participation (to 63.2) saw the Trend unemployment rate edge higher to 7.3% (after July was revised up to 7.2%). Townsville has managed to add 16,200 new positions in the past 12 months yet with the unemployment rate still relatively high there is clearly scope for further improvements in coping months.

When we consider the split between Greater Brisbane and the Rest of Queensland we see the out-performance of the regions writ large. In the past year Trend employment in Greater Brisbane has risen by 33,200 but full-time positions have fallen by 4,200. Trend unemployment has risen by 0.9% to 6.4% over the year. In the Rest of Queensland Trend employment is up by 54,000 for the year with 38,700 of those full-time positions; the Trend unemployment rate has fallen by 1.0% to 5.8%. Regions such as Townsville, Cairns, Mackay, Toowoomba and the Sunshine Coast have all contributed with Trend employment growth in excess of 7% while in Greater Brisbane it languishes at 2.8% y/y.

Today also saw the release by the ABS of the Quarterly data on industry jobs. These are presented for the regions on a 4-quarters smoothed basis, and as such are an extremely lagged indicator. In response to this we have created the Conus Trend Industry Jobs series which dis-aggregates the 4 quarters average data, Trends that and makes some adjustments for consistency with the original, quarterly ABS data for QLD. As a result the series gives us a far better idea of recent movements in the regional industry data. However, it should be noted that this quarterly data series should not be compared directly with the Conus Trend Jobs data which is created monthly. Nevertheless, the two series should paint similar pictures, and that is indeed the case. For example the Conus Trend Industry Jobs data for August suggests Cairns saw a total increase in employment of 8,000 over the past 4 quarters. That compares to the Conus Trend Jobs data which has employment up 9,500 in the same period.

Considering this data set we see that the industries which saw the best growth for the year in Cairns were Accommodation & Food (up 1,500), Construction (up 3,100), Healthcare (up 1,800) and Public Administration (up 1,800). Industries which saw losses were Agriculture (down 1,600) and Mining (down 1,100). The largest employing industry remains the Healthcare sector (14,600 employed) with Retail Trade and Education just behind at 12,400. Employment in the Construction sector sits at 12,000 which is its highest level since May 2013.

In Townsville there were no major losers with the best gains seen in Accommodation & Food (up 5,400), Construction (up 2,600) Healthcare (up 2,000) and Public Administration (up 1,500). The largest employing industry is Healthcare (16,700 employed) with Accommodation & Food at distant second at 12,800.

The full Conus Trend Jobs data set 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 so. The Conus Trend Industry Jobs data is available by subscription and at request.

Conus Trend Regional Jobs QLD – Aug 2017

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

 

Cairns Conus Trend “Job Seeker” rate hits lowest in almost 3 years

Regular readers will be well aware that there are various ways to look at the labour market; the standard “unemployment rate” being just one of them. Another, less well known measure, is provided by way of the Dept of Social Services data in their monthly payment recipients release (available here).

When looking at the data for our region we sum the Dept of Social Service totals for the Atherton, Cairns, Innisfail, Mareeba, Mossman and Yarrabah Service Zones. These Service Zones, when taken together, may not precisely correspond to the Cairns SA4 region but are as good an approximation as we can get. Given the volatile nature of this original, unadjusted data series we have created a Conus Trend Job Seekers Rate using the trend number of payment recipients as a percentage of the Conus Trend Labour Force.

It needs stressing that how the Dept of Social Service count those who are seeking jobs and receiving allowances is very different from how the ABS define someone as “unemployed”. The rules around who receives what allowance also change over time so this is a data set that has to be treated with caution if making comparisons over periods when changes have occurred. As a result of these caveats we stress that the absolute levels may be difficult to reconcile with other measures, but the movements in Trends (at least over periods when rules don’t change) can provide us with useful supporting evidence.

It would seem that the improvements being seen in the Conus Trend series over the previous few years are being reflected in the Conus Trend Job Seekers rate which fell in July to 8% (from 8.1% in June). This has fallen from a recent high of 8.8% in Oct 2015 and is now at its lowest level since Oct 2014.

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.

 

Regional Building Approvals; no joy for the North

The release of the regional building approvals data by the ABS today allows us to update our Conus Trend series for the SA4 and Local Govt Areas.

What we find is a story of slightly weaker, but generally stable, approvals in the North. The Cairns SA4 region sees Trend approvals stable at 77 after June was revised down from 80. Townsville SA4 falls slightly to 79 after June was revised up from 78 to 80. The picture at the LGA level is similar.

Cairns Regional Council (incl. Douglas Shire) fell to 53 after June was revised down from 56 to 54. Cassowary Coast Regional Council was stable at 6 after June was revised up from 5, Tablelands Regional Council (incl Mareeba Shire) was stable at 18 and Townsville City Council was also stable at 72, although June was revised up from 68.

The full Conus Trend data set is available for download below. Please feel free to use this data (for non-commercial use) but we would appreciate yoy acknowledging Conus when you do so.

Conus Trend Regional Building Approvals QLD – Jul 2017

Chinese visitors to TNQ fall for first time in almost eight years

Further data from TRA for the TNQ region highlights the concern we flagged earlier today. Over the past year the once-booming Chinese sector of the market has seen a decline in the region of 1.2%. Chinese visitors to TNQ fell from 216,726 in the year to June 2016 to 214,082 in the year to June 2017. This is the lowest annual number since March 2016 and is down 6.7% from the highs seen six months ago.

Visitor numbers from the USA continue to grow (up 5.5% y/y) along with Japan (up 5.4%). The UK has contracted over the past 6 months and is down 5.6% for the year to the lowest level since Dec 2015.

International Visitor growth leaves Queensland behind

Today sees the release of the June quarter International Visitor Survey from Tourism Research Australia (full report available here); and although visitor numbers are up strongly it’s not a happy story for Queensland.

Visitor numbers to Australia show a 8.7% y/y increase to almost 7.9 million (another new record high). Expenditure also rose strongly, up 10%, to almost $27.9 billion over the year. Average spend per visitor rose 1.1%, barely in line with inflation.

Queensland’s data was far less impressive. Visitor numbers rose 5.6% which was the weakest increase across all states and territories. Expenditure in Queensland was up an even weaker 3.2% (also the slowest of all states and territories) which resulted in average spend per visitor which fell 2.3% to $1,998. Queensland’s share of the total international visitor market has now fallen to an all time low of just 33.2%; it stood as high as 43% a decade ago.

In our own region, despite the impact of surging Chinese visitors, things are weaker still. Total visitor numbers to TNQ were up just 4.4% for the year while total expenditure actually fell by 0.4%. The average spend per visitor to TNQ is down a disturbing 4.8% over the year (in real terms this is in excess of a 6% decline). These are numbers that must be concerning for the new CEO at TTNQ and should give pause for thought to all those involved in the industry in the North. What is it that the region is not offering to international visitors such that the region’s share of the international market continues to languish close to all time lows?

We shall post further breakdown of the TNQ data once we receive more detailed numbers from TRA later today.

The June National Visitor Survey is due for release in a fortnight.