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).

Dept of Social Services data adds to list of positive news for employment in the region

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). Their most recent release relates to data for Sept.

When looking at the data for our region until July 2017 we have had to sum the Dept of Social Service totals for the Atherton, Cairns, Innisfail, Mareeba, Mossman and Yarrabah Service Zones. These Service Zones, when taken together, did not precisely correspond to the Cairns SA4 region but were as good an approximation as we could get. However, since the data for July 2017 the Dept now presents the data according to SA3 regions. which allows us to sum Cairns North, Cairns South, Innisfail-Cassowary Coast, Port Douglas-Daintree and Tablelands (East)-Kuranda SA3 areas to get a total for the Cairns SA4 region. 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; but this recent change in presentation of the original data means that care should be taken when comparing data from before and after July 2017. Nevertheless, having looked at the derived Trend series it would appear that the previous approximation using Service Zone data is accurate enough to make broad trend comparisons valid.

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 has been falling since August 2016 and now sits at 7.6% (down from 7.7% in August).

Regional Building Approvals data weakens in the North

The regional building approvals data from the ABS, seen through the lens of the Conus Trend estimates, shows things slightly weaker in the North of QLD.

In the Cairns SA4 region we see Trend approvals for Sept at 102, which is unchanged from a downwardly revised 107 last month. Within the region’s Local Govt Areas we see Trend approvals of 71 in Cairns Regional Council, incl Douglas Shire, (down from a downwardly revised 73 in Aug); 9 in the Cassowary Coast (up from a downwardly revised 8 in Aug) and 21 in Tablelands Regional Council, incl Mareeba Shire, (up from a downwardly revised 20 in Aug).

To our south in the Townsville SA4 region Trend approvals fell to 67 (from a downwardly revised 70 in Aug). Townsville City Council saw Trend approvals fall to 59 (from a downwardly revised 63 in Aug).

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

Conus Trend Regional Building Approvals QLD – Sept 2017

Digging into the SALM data….

Last week we posted on the latest Small Area Labour Market (SALM) data from the Dept of Employment as it related to the Local Government Areas of Cairns, Cassowary Coast and Townsville (see here). We have had time to do further work on the latest SALM release and can now provide further detail of the data as it relates to all of the LGAs in Queensland for the June quarter.

Using the unsmoothed (original) SALM data, which is tucked away in the explanatory notes sections, we have created a Conus Trend series of unemployment rates and derived employment for all the QLD LGAs.

This shows us that the LGA with the highest Trend unemployment rate (excluding Aboriginal councils) was Charters Towers Regional Council at 11.7% (which is down from 13.0% a year earlier) with Isaac Regional Council the lowest at 2.0% (down from 2.4% a year earlier).

While the SALM data does not explicitly provide employment data it can derived from the Labour Force and Unemployment data that is provided (although we acknowledge that the different methodologies used for the estimation of unemployment and Labour Force data make such a derivation problematic we consider that the estimated Trend based on this derivation provides a useful, albeit limited, indicator for employment trends). Once we create a Conus Trend for this derived data series we see the following Trend employment increases in our Far North region LGAs for the year to June 2017 as follows:

  • Cairns Regional Council +5,298
  • Cassowary Coast Regional Council +884
  • Tablelands Regional Council +729
  • Douglas Shire Council +435
  • Mareeba Shire Council +459
  • Yarrabah Aboriginal Shire Council +110

Summing these we get an approximation for the Cairns SA4 region, for which we calculate the monthly Conus Trend Jobs series, of an increase of 7,915. This compares to an increase to June 2017 in the Conus Trend for Cairns SA4 of 11,500.

We should note that these two series cannot be easily compared since one is based on monthly ABS Labour Force Survey data while the  SALM quarterly estimates are created using data from Centrelink of people in receipt of Newstart and Youth Allowance by postcode, the ABS regional labour market data at SA4 level and the Census labour force data at SA2 level. The quarterly Conus Trend LGA data will, by its nature, be lagging behind the movements seen in the Conus Trend Jobs series. In addition, as noted above, the Trend LGA employment data needs to be treated with caution. Nevertheless it is clear that both data sets demonstrate a clear and significant improvement in the story for the Far North. Taken together the Conus Trend Jobs data for the SA4 regions and the new Conus Trend LGA data provide us with a more complete take on regional employment numbers and allows us to see more clearly where within the SA4 regions the employment changes might be taking place.

Dept of Employment SALM data confirms the improvement in the North

After yesterday’s ABS regional jobs data (see here) showed continued improvement in the labour force measures in the Cairns and Townsville SA4 areas, today we get the Dept of Employment’s, much awaited, quarterly Small Area Labour Market (SALM) data for the second quarter which allows us to consider data at the local government area level.

The SALM estimates are created using data from Centrelink of people in receipt of Newstart and Youth Allowance by postcode, the ABS regional labour market data at SA4 level and the Census labour force data at SA2 level. These data sets are used to create the SALM estimations using a methodology called Structure Preserving Estimation (SPREE). Due to the highly volatile nature of this data the Dept presents the data on a smoothed 4 quarters moving average basis for Local Government Areas. This creates a very lagged measure so we have utilised the original, un-smoothed  data (which is hidden away on the Dept website) to create a Conus Trend series for our local LGA regions.

This shows Trend SALM unemployment rates at 6.3% (unchanged from March) for Cairns Regional Council, a rate of 6.6% (down from 6.7% in March) for the Cassowary Coast Regional Council area and 8.2% (down from 9.1% in March) for the Townsville City Council area.

The Conus Trend analysis of the derived SALM employment data shows Cairns Regional Council area adding 5,900 employed for the year to June 2017, Cassowary Coast Regional Council area added 880 and Townsville City Council area added 5,600.

Note: Given the different methodologies used to calculate the two different series, comparisons between the SALM and ABS Labour Force data (and the derived Conus Trend data) need to be treated with caution.

Regional jobs data shows regional QLD employment growth at fastest pace in a decade

The ABS released their original, unadjusted regional labour force data for Sept this morning. We need to consider the Conus Trend series to make much sense of this highly volatile data series.

When we consider the split between the Greater Brisbane and Rest of Queensland areas we see that the recent trend of out-performance from the regions remains in place, although total employment growth in the capital was slightly better than the regions this month. The biggest divergence is seen when we consider full-time and part-time employment. Over the past year Greater Brisbane has added 38,200 to Trend employment, although all of those have been in part-time positions with full-time employment down 1,800. In the Rest of Queensland Trend employment has grown by 57,700 this year with fully 39,900 of those in the full-time sector.

Trend employment growth in the Rest of Queensland is now at 5.0%, which is the fastest pace in more than a decade. Greater Brisbane employment growth sits at 3.2%, which is still better than the national average of 2.8%.

In our own region we once again see the Trend unemployment rate in Cairns hovering around the 5% mark, the Sept Conus Trend unemployment rate sits at 5.2% (up slightly from a downwardly revised 5.2% last month). The Trend unemployment rate has been between 5.5% and 4.9% for the past 7 months with Trend employment stable this month but up 9,100 over the course of the year. As is the case for the Rest of Queensland, full-time employment has been the stand-out performing sector for Cairns with Trend full-time employment up 10,500 in the past 12 months (and up 600 this month) while part-time employment has dropped slightly.

Trend employment is growing at a very healthy 8.2% in Cairns.

To our south in Townsville there might be some concern that the recent stellar recovery is starting to look less resilient (at least so far as the headlines might be concerned). Trend employment edged higher (by 100) this month and remains up 15,500 higher over the past 12 months. However, the Trend unemployment rate is back up to 9.0% (after August was revised up to 8.5%) which may give some cause for concern. However, we should note that this is on the back of a rally in participation to levels not seen in more than  2 years.

Trend employment is growing at a state high of 16.0% in Townsville.

The youth sector, which has been of concern in the north for some time, now appears to have stabilised at more “normal” levels, at least in Cairns. Trend Youth Unemployment Rate now sits at 12.3% in Cairns (well below the rate in the Rest of Queensland and only slightly higher than in Greater Brisbane) with 2,700 Trend jobs added in the past year. In Townsville the sector has been a real cause for worry and continues to be, despite the overall recovery in the region. Trend Youth Unemployment Rate sits at 22.1% (the third worst in the state after Wide Bay and the Outback), despite having added 2,800 Trend jobs in the past year.

The full set of Conus Trend regional jobs data is available for download below. Please feel free to use this data (for non-commercial purposes). We would appreciate you acknowledging Conus when you do so.

Conus Trend Regional Jobs QLD – Sept 2017

Inflation remains below RBA target; it’s Tradables keeping it there.

The ABS release of Q3 CPI this morning has come in slightly below market expectations with core inflation remaining stuck just below the bottom of the RBA target range.

CPI posted a 0.6% q/q increase for the Sept quarter (market expectations had centred around +0.8%) which meant year-on-year inflation fell slightly to 1.8% (from 1.9% in Q2). However, the two “core” measures which will be the indicators most closely watched by the RBA (trimmed mean and weighted median) came in at +0.4% and +0.3% q/q for y/y increases of 1.8% and 1.9%. The average “core” inflation measure therefore remained unchanged from Q2 at +1.85% y/y.

What is clear from the chart below is that it’s Tradables inflation (i.e. those items impacted by a stronger A$) that is keeping price pressures so low. Non-tradable inflation is currently running at 3.2% y/y (its highest level since the end of 2013) while Tradables is back into negative territory (-0.9% y/y) for the first time in 2 years. The oft-noted desire of the RBA to see the A$ weaken further would certainly go a long way to helping core inflation move back to their 2-3% medium term target. They will therefore no doubt be delighted to have seen the Aussie lose half a cent to the $ after the CPI number was released, and to be down about 1.5 cents in the past 5 days.

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.

11-16 %
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.