Labour Account; hours worked fall, incomes growth slows. Regions do worse (again)

Today’s release of the March 2020 quarter Labour Account data series provides a wealth of information. One thing it allows us to do is take a  look at incomes across various industry sectors and how they have changed in the past 12 months. The data provides us, for each industry type, the year-on-year changes in the average hourly income per employed person, the average number of hours actually worked per employed person, and the resultant average income per employed person.

There are marked differences between sectors with some seeing hourly rate increases driving healthy income rises (e.g. Accommodation & Food and Arts & Recreation); very few seeing hours worked increase (e.g. Agriculture and Admin) and those where falling hourly rates coupled with declining hours results in very weak income growth (e.g. Construction and Utilities). Across all industries average hourly income rose by 2.68% but the average number of hours fell 1.04% resulting in an increase in average income of just 1.61% (well below CPI); falling from 2.08% in the previous quarter.

The reduction in hours worked during the quarter is further evidence of the fact that the impact of the COVID-19 pandemic was already being felt, particularly in the Accommodation & Food sector, prior to the full lock-down coming into force towards the end of March.

Those sectors that contributed the most to the rise were;

  • Retail (added 0.57 ppts): hourly rates +6.4%, hours worked -0.8% = incomes +5.5%
  • Accommodation & Food (added 0.28 ppts): hourly rates +12.5%, hours worked -8.5% = incomes +3.3%
  • Professional Services (added 0.28 ppts): hourly rates +4.1%, hours worked -1.6% = incomes +2.6%

At the other end of the spectrum;

  • Construction (deducted 0.35 ppts): hourly rates -1.7%, hours worked -3.0% = incomes -4.5%

By combining the Labour Account data with our own Conus Regional Industry Employment Trend data we can estimate the average income changes across QLD’s regions. These estimates assume that industry sector changes are equal across the nation; differences in regions are therefore driven by the varying industry sector make-up of their employment environment.

While nationwide average incomes were up 1.61%, in QLD the rise was a little less at just 1.57%. Greater Brisbane saw better growth at 1.77% while the Rest of QLD was significantly weaker at just 1.37%. In our own area Cairns performed relatively well (+1.60%) while Townsville was the second best QLD region (+1.65% and just behind the Gold Coast +1.66%) on the back of over-representation in the Arts & Recreation sector which, although small, saw average incomes rise 9.1% y/y and accounts for almost 3% of Townsville employment (versus just 1.5% nationally).

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