Unemployment

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<p>EXPERT INSIGHT</p>

<p>The good news is that the job market recovery continues – and continues quite spectacularly. More jobs were created in the past six months than any similar period on record. Looking at March alone, the labour market results are truly awesome except for the drop in full-time positions – and that was a payback from the outsized gain in February. Unfortunately however, Aussies will remain sceptical on the speed and scale of the recovery for at least one more month – when the first month of post-JobKeeper data is published.</p>

<p>But it is a case of so far, so good. More people are looking for work, more people are finding work and the jobless rate continues its progress to pre-COVID levels. And while significant spare capacity remains, there were good gains made in the latest month on the measures of hours worked, labour under-employment and under-utilisation.      </p>

<p>Looking ahead, there is indeed the uncertainty about what is the ‘true’ state of the job market after JobKeeper. But reassuringly, all measures of labour demand including job ads/vacancies show that there are plenty of businesses looking for staff. In fact, SEEK has today reported the highest number of monthly job ads in its 23+ year history.  </p>

<p>There are plenty of jobs to be had, but will Aussies fill the available positions? That is the key issue for policymakers, and ultimately the economy. Ultimately if Aussies won’t take up the jobs on offer, then more specific attempts must be made to bring in foreign workers. Otherwise, economic momentum will be constrained.  </p>

<p>The Reserve Bank is expected to stick to its script for now, vowing not to lift cash rates until 2024. That determination to maintain steady rates has been reinforced today showing the consumer inflation expectations fell from 4.1 per cent to 3.2 per cent in April. But clearly plenty of water will flow under the bridge before 2024.</p>

<p><strong>What do you need to know? </strong></p>

<p>Employment rose by 70,700 in March (consensus: +35,000) after increasing by 88,700 jobs in February. Full-time jobs fell by 20,800 and part-time jobs rose by 91,500 positions. The number of people employed rose to a record high of 13.078 million.</p>

<p>The unemployment rate fell from 5.8 per cent to a 12-month low of 5.6 per cent in March (consensus: 5.7 per cent).</p>

<p>Hours worked rose from 1,762 million hours to a record high of 1,800 million hours (up 2.2 per cent) to be up 1.2 per cent over the year.</p>

<p>Participation rate: The participation rate rose from 66.1 per cent to a record high of 66.3 per cent in March (consensus: 66.1 per cent).</p>

<p>Spare capacity: In March, the underutilisation rate fell from 14.3 per cent to a 15-month low of 13.5 per cent. The underemployment rate fell from 8.5 per cent to 7.9 per cent – a 7-year low.</p>

<p>Unemployment across states in March: NSW 5.4 per cent (February: 5.6 per cent); Victoria 6.1 per cent (5.6 per cent); Queensland 5.9 per cent (6.1 per cent); South Australia 6.3 per cent (6.8 per cent); Western Australia 4.8 per cent (6.0 per cent); Tasmania 5.9 per cent (5.7 per cent); Northern Territory 5.6 per cent (4.9 per cent); ACT 3.4 per cent (4.1 per cent).</p>

<p>Employment across states in March: NSW (+14,700); Victoria (+6,100), Queensland (+23,300), South Australia (-600), Tasmania (+400), the ACT (-2,700), Western Australia (+32,600) and the Northern Territory (-1,600).  </p>

<p><strong>What are the implications for investors?</strong></p>

<p>One year on from the COVID lockdown and more Aussies are in jobs than ever before. Collectively Aussies are also working more hours than ever before. And the proportion of females employed has never been higher. We need to remember than when the jobless rate lifted to 7.5 per cent in May 2020, some economists were tipping that it would ultimately peak in excess of 16 per cent.</p>

<p>The economy has out-performed the ‘official’ forecasts from Federal Treasury and the Reserve Bank. If this out-performance remains significant then monetary and fiscal stimulus measures will need to be re-assessed. But that point is still some way off. Foreign borders remain closed, the vaccine roll-out is still slow and less than a month has passed since JobKeeper ended.</p>

<p>The record lift in jobs, together with the strengthening of job security will underpin consumer spending in coming months. And the desire to engage in retail therapy will be underpinned by the likelihood that the foreign border will be closed until much later in the year.</p>

<p>The improvement in the Western Australian job market is clearly a stand-out. The state led the nation in job creation in March and the jobless rate is the lowest for over seven years (since December 2013) – assisted in part by low population growth. The housing market will clearly be a key driver of the economy in 2021, courtesy of Building Bonus Grant and the HomeBuilder grant. In addition, the mining sector continues to be supported by solid demand and high commodity prices. Jobs growth in Queensland occurred following the announcement of the $200 travel voucher scheme, while interstate migration continues to support economic activity in the Sunshine State.       </p>

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cjames

The number of people employed reached a record high in March: CommSec's Craig James

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<p>The rapidly improving labour market is likely to spur confidence and housing affordability, adding upward pressure to already strong house prices, according to Archistar chief economist Dr Andrew Wilson.</p>

<p>His comments come after the Australian Bureau of Statistics unveiled a sharp fall in jobless rates for February, to near-pre-COVID levels.</p>

<p>[smartcode_project:default project_id=27070]</p>

<p>“The unemployment rate has fallen sharply over February and is now remarkably within striking distance of pre-COVID shutdown levels, less than a year from the commencement of the pandemic.</p>

<p>“The ABS reports that the national unemployment rate seasonally adjusted fell sharply by 0.5% over February to 5.8% - the lowest rate since the pre-covid result of 5.2% recorded over March 2020.</p>

<p>“The number employed nationally has now almost recovered to pre-covid levels to be now down by just 1800 since March 2020."</p>

<p>[smartcode_project:default project_id=7758]</p>

<p>Dr Wilson noted all states reported falls in the jobless rate over February with QLD the best performer falling by 0.8%. NSW and VIC reported the lowest jobless rates at 5.6%.</p>

<p>“Capital city housing markets have recorded strong buyer demand this year so far with prices rising sharply – particularly in Melbourne and Sydney.," he said.</p>

<p>“And concerns over the possible significant negative impact on the economy of the tapering of the Job Keeper allowances at the end of this month will also likely to be to be misplaced – again.”</p>
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The rapidly improving labour market is likely to add upward pressure to already strong house prices, according to Archistar chief economist Dr Andrew Wilson.

jchancellor

Low unemployment to add upward pressure on house prices

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<p>Philip Lowe, the RBA Governor, has indicated the central bank's primary concern is employment, and those who don’t have a job and whose wages aren’t growing at sufficiently high rates. </p>

<p>"So to the extent that anything keeps me awake at night, that’s what worries me is the social and economic cost from a protracted period of unemployment. </p>

<p>"We know that low interest rates do push up asset prices, that’s part of the transmission mechanism. </p>

<p>"What would concern me, if we saw on the back of these rising asset prices, lending standards deteriorate and people go into the bank and borrowing ridiculous amounts of money in a speculative boom. </p>

<p>[smartcode_project:default project_id=29660]</p>

<p>"So this is why our focus is very much on making sure these lending standards remain sound because that would be a big problem if we saw a debt financed speculative boom in asset prices. </p>

<p>"We are not seeing that at the moment. </p>

<p>"The equity market is below its previous peaks, housing prices in Sydney and Melbourne, while they’re rising, they’re not really higher than they got to a little while back in some of the smaller capital cities. </p>

<p>[smartcode_project:default project_id=4939]</p>

<p>"In regional Australia housing prices are rising quickly, but there are fundamental factors at work here. </p>

<p>"So the issue is if prices are rising, are people borrowing responsibly and carefully? </p>

<p>"And to date they are," Philip Lowe concluded.</p>

<p>Lowe also warned that looser lending standards would increase the upward pressure on house prices and create financial risks.</p>

<p>“We are not at this point, but we are watching carefully,” he said.</p>
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The RBA Governor Philip Lowe has said he would be worried if Australians started “borrowing ridiculous amounts of money” in a speculative way.



Don't borrow ridiculous amounts of money: RBA Governor's warning to home buyers

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<div>I took a look <a href="http://petewargent.blogspot.com/2018/06/unemployment-falls-to-54pc" target="_blank">here</a> at the employment growth figures during the week, which broadly showed that the unemployment rate in Australia is back down to where it was in 2013. </div>
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<div>The number of unemployed persons dropped sharply in the month of May, down by 26,800 to 714,600, taking the unemployment rate down from 5.6 per cent to 5.4 per cent. </div>
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<div>So that's the good news. </div>
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<div>The state making the most substantial inroads lately has been Victoria, with the number of unemployed persons down to 174,400 from 208,500 a year earlier.</div>
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<div>Very good news!</div>
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<div>The unemployment rate in Victoria has declined accordingly to 5.1 per cent, down from 6.1 per cent a year ago.</div>
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<div>So that's getting quite close to the 4.9 per cent of New South Wales. </div>
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<div>Like Sydney before it, Melbourne is enjoying the fruits of its construction boom.</div>
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<div>Some progress, then, but overall there are still more than 700,000 out of work, and there remains plenty of slack in the labour force nationally. </div>
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<div>A look at the trend chart for unemployed persons underscores this point.</div>
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<div>In October 2014 the two most populous states had a combined 442,900 unemployed persons, a figure that's since fallen by about 60,000 or 14 per cent. </div>
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<div>Elsewhere, however, in aggregate there's been little meaningful progress. </div>
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<div>With regards to underemployment, the the trend rate declined to 8.5 per cent in May 2017, which is a bit below peak of 8.7 per cent seen in 2017. </div>
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<div>Meanwhile, the underutilisation rate also declined by 0.4 per cent to 13.9 per cent over the past year. </div>
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<div>Just about enough evidence here to suggest an ongoing improvement.</div>
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<div>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</div>
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pwargent-M4siyDbqQY

Like Sydney before it, Melbourne is enjoying the fruits of its construction boom: Pete Wargent

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<div>The ABS released its Labour Force data for August 2015, which came in somewhat better than had been expected. </div>
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<div>The market had feared material downward revisions to employment figures following amendments to population growth assumptions, but happily in the event the impact was fairly benign.</div>
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<div>It is nevertheless worth looking at the revised data in the long run employment chart below to show the new shape of the chart...which is to say, essentially very similar.</div>
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<div>Total employment was revised down, but over the year total employment still increased by +235,000 or +2.0% (up from +1.8% in the year to July), an impressive headline figure and the strongest annual increase in the seasonally adjusted data series since April 2011.</div>
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<div>Handily this rate of employment growth is now far ahead of the rate of population growth, which following the latest Arrivals &amp; Departures (see link for more) figures I now estimate to be tracking at only around +1.3%.</div>
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<div><a href="/images/2015/09/11/A1.jpg" target="_blank">Click to enlarge</a></div>
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<div><span>Employment rose by +17,400 in August following an upwardly revised gain in employment of +39,200 in August, which is a fine result in the circumstances and well ahead of market expectations of +5,000.</span></div>
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<div><span>Full time jobs accounted for most of the monthly gains, and over the past year there have been more full time jobs created (+130,700) than part time positions (+104,200) - although as you can see below part time employment is taking a more significant role in the labour force than it once did. </span></div>
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<div class="separator"><strong><span style="text-decoration: underline;">State versus state...&amp; the unemployment rate</span></strong></div>
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<div class="separator">The net employment gains in August were mainly accounted for by Queensland (+11,200) and New South Wales (+9,200), with the New South Wales economy adding a thunderous +118,800 jobs over the past year, more than half of the total for Australia, and overwhelmingly full time positions.</div>
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<div class="separator">Victoria (+63,000), Western Australia (+22,100) and Queensland (+20,700) also added net employment over the past year, but South Australia has gone backwards over the same time period. </div>
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<span>I have been warning here for at least a couple of years now that the longer this ugly dynamic continues and without a kickstart for the local economy the greater the fallout could be in terms of South Australian unemployment. </span><br><span><br></span><span>Amazingly there were more full time employed persons in Q4 2007 in South Australia than there are today. </span><br><span><br></span><span>The below graphic shows that while the New South Wales economy has added a stonking +267,200 jobs over the past five years, the two southern states combined have added essentially none. </span>
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<div>That said, with the depreciating dollar the outlook for Tasmania has improved considerably over the past 18 months, and without sigificant population growth to be absorbed the trend unemployment rate in the Apple Isle has declined from a peak of 8.1 per cent in August 2013 to just 6.5 per cent today.<br><br>That's great to see.</div>
<div> </div>
<div>Unfortunately the same cannot be said for South Australia where the trend unemployment rate has spiked alarmingly from 6.6 per cent to 8.1 per cent and rising in less than a year. </div>
<div> </div>
<div>Concerningly it appears likely that there may yet be worse to come as the "Holden effect" takes its toll across the suburbs of Adelaide, with mining and manufacturing two of the worst hit sectors of the labour market.</div>
<div> </div>
<div>The unemployment rate in resources rich Western Australia has also continued to trend up to 6.1 per cent from just 3.7 per cent in June 2012. </div>
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<div><a href="/images/2015/09/11/a7.jpg" target="_blank">Click to enlarge</a></div>
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<div>New South Wales has been the clear standout despite soft regional employment growth, with low interest rates allowing the Sydney economy and housing market to fire on all cylinders. </div>
<div>
<br>At the national level despite some statistical noise along the way the trend unemployment rate has now been steady for the past 12 months at 6.2 per cent.</div>
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<div><a href="/images/2015/09/11/A6.jpg" target="_blank">Click to enlarge</a></div>
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<div>With the rate of employment growth comfortablt outpacing the rate of population growth, has the unemployment rate therefore peaked for this cycle? Perhaps, but the jury is still out on that one. </div>
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<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
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<div>This was a robust result with the economy adding a sprightly +235,000 jobs over the past year and with corresponding important implications for monetary policy settings. </div>
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<div>Had the unemployment rate jumped higher as had been anticipated by some analysts prior to this release then the Reserve Bank may well have been inclined to pull the trigger on further interest rate cuts.</div>
<div> </div>
<div>Fortunately in the event the labour force figures were considerably better than had been feared and markets now appear fairly certain that interest rates will stay on hold at 2 per cent through October. </div>
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<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Unemployment falls back to 6.2%: Pete Wargent

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<div>The ABS released its Characteristics of Recent Migrants survey for November 2016 yesterday, a release which the statistician puts out every three years. </div>
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<div>The anti-immgration lobby will be trawling through the figures to see whether migrants were taking all our jobs (go home, we're full!) or not working enough (bludgers!), but in the end the three-year change in the figures wasn't all that remarkable.</div>
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<div>Most migrants are employed, including 82 percent of skilled migrants, while the unemployment rate for Australian born citizens at 5.4 per cent was comfortably lower than the national average.</div>
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<div>The labour force participation rate for recent migrants and temporary residents remained high at 70 per cent, and 84 per cent reported that wages or a salary were the main source of household income. </div>
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<div><strong><span style="text-decoration: underline;">Recent migrants head to capitals</span></strong></div>
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<div>The system is broadly working as it should, then, while the recent increase in permanent settlers is largely accounted for by an increased refugee intake from Iraq and Syria.  </div>
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<div>One significant trend which stood out to me was the clear acceleration in recent migrants with their usual place of residence in one of the capital cities. </div>
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<div>Migrants have always preferred the capital cities, of course, but at 88.3 percent the figure has clearly been accelerating higher over the past dozen years to now sit at incredibly high levels.  </div>
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<div>Given that Australia's rate of immigration has also increased dramatically over the past dozen years this is potentially a hugely significant demographic trend.  </div>
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<div>About 55 percent of Australia's population growth is presently accounted for by net overseas migration, while the other 45 percent relates to natural growth (being more births than deaths). </div>
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<div>The trend towards capital cities holds true across all visa classes, but particularly so for those arriving as international students, a means of entry which is set to the most consequential driver of demographic trends.</div>
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<div><a href="https://www.propertyobserver.com.au/images/2017/06/14/B1.jpg" target="_blank">Click to enlarge</a></div>
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<div>Looking at the geographical figures it becomes clear that since the peak of the resources boom Western Australia is not attracting or retaining recent migrants as successfully as it once was, while the southern states have not been retaining as many migrants as they might wish to. </div>
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<div>The slack has been instead picked up by Sydney, and to a lesser extent Melbourne.  </div>
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<div><a href="https://www.propertyobserver.com.au/images/2017/06/14/B2.jpg" target="_blank">Click to enlarge</a></div>
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<div>Interestingly Sydney loses a chunk of its population each year interstate or to other parts of regional New South Wales, meaning that the residual population of Greater Sydney is heavily tilted towards overseas born residents. </div>
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<div>Melbourne and Brisbane on the other hand are attracting migrants internally, and as a result absolute population growth is tracking at record highs in Greater Melbourne, and is picking up speed in Brisbane.</div>
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<p class="p1"><span class="s1"><em>PETE WARGENT is the co-founder of </em><a href="https://allenwargent.com/"><span class="s2"><em>AllenWargent</em></span></a><em> property buyers (London, Sydney) and a best-selling author and </em><a href="https://petewargent.blogspot.com/"><span class="s2"><em>blogger</em></span></a><em>.</em></span></p>
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<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
<h3 class="post-title entry-title"><a href="https://petewargent.blogspot.com.au/2017/06/migrants-flock-to-capital-cities-stay"> </a></h3>
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Migrants flocking to capital cities - and staying there too: Pete Wargent

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<div>EXPERT OBSERVER</div>
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<div>Another substantial surge in jobs was reported for June, with total employment up by a seasonally adjusted 50,900 in the month.</div>
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<div>This led to the usual quibbles about whether the figures are 'right' or not. </div>
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<div>This seldom happens when the number are below expectations.</div>
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<div>But when there's a beat...every time!</div>
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<div>There are even occasional calls to ditch the seasonally adjusted figures entirely in favour of the smoother trend data, but I'm not sure I buy that.</div>
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<div>What are the trend figures, after all, but a representation of the same numbers from the survey? </div>
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<div>The further you disaggregate the figures the more prone they are to throwing out unusual results. </div>
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<div>For example, Macquarie highlighted an oddity in that the bulk of jobs growth over the past four months was accounted for by youth employment, especially from the female cohort.</div>
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<div>The detailed labour force figures at the regional level are similarly prone to volatility, which is why the ABS reports annual average figures in addition to the original survey results. </div>
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<div> </div>
<div>For all of the grouching, the labour force has continued to tighten gradually over the past few years. </div>
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<div>For the monthly doubters, the seasonally adjusted unemployment rate has now fallen by more than one percent from 6.38 per cent in October 2014 to 5.37 per cent in June 2018.</div>
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<div>If you prefer to use the trend rate, then that's plotted below for you too. </div>
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<div>The unemployment rate is now at the lowest level since 2012. </div>
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<div>Another piece of pessimistic statistical trickery is to highlight the underutilisation rate while neglecting to report the more telling volume measures of underutilisation.</div>
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<div>In other words, yes lots of people want more hours of work, but the numbers of extra hours wanted has been declining over the past four calendar years too. </div>
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<p><br><span>This is good news, and it should be embraced as such!</span><br><br><span>Welcome to the recovery.</span></p>
<p><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></p>
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The labour market is improving: Pete Wargent

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<div>Couldn't think what to blog about today - creative juices aren't flowing at all, perhaps I need black coffee - so thought that for something different I'd take a look at Australia's oft-discussed government debt, and a few forecasts from the Australian Office of Financial Management (AOFM).<br><br>The unemployment rate in Australia has declined from 6.3 percent to 5.7 percent since the beginning of 2015, taking the trend unemployment rate to its lowest level in 34 months at 5.71 percent.</div>
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<br><div>The supporting figures, however, show that we are absolutely miles away from full employment, with oodles of part time work and under-employment around. </div>
<br><div>Indeed, tomorrow's capex report will likely show that the collapse of business investment in the <strong>mining</strong> sector has spilled over adversely into associated parts of the services and manufacturing sectors (since some of these businesses naturally provided inputs into the resources investment boom - warehousing, transport, equipment manufacture, and so on).<br><br>In effect, via the unwinding of mining capex resources regions will be experiencing the multiplier effect of the mining investment boom in reverse, sucking some mining-dependent regions in Western Australia and Queensland into a gravitational black hole. I think this has already happened, in truth, the data will just confirm it.<br><br>Anyway, that's tomorrow's news, but one senses the outlook for capital expenditure won't be all that great, and the recovery in all likelihood has a long way to run.<br><br><a href="/images/2016/09/01/Lifecycle.jpg" target="_blank">Click to enlarge</a>
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<img src="/images/2016/09/01/Lifecycle.jpg" alt=""><br><br>(huge h/t to whichever internet wag created the above graphic - it gets me every time...too funny).<br><br><strong><span style="text-decoration: underline;">Some Treasury forecasts...</span></strong><br><br>As new resources projects come online, Treasury expects the Australian economy to keep growing at a solid clip, in part driven by increasing export volumes, particularly of LNG.</div>
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<div>Treasury has maintained its positive forecasts for real GDP growth over the next few years, with economic growth to be aided by household consumption and net exports as the export volumes increase.</div>
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<div>However, these forecasts somewhat optimistically assume that household consumption will continue to remain positive, with the terms of trade holding also up at a level above anything we saw prior to the start of the boom (rather questionable given the trend since 2012!). Coking coal prices are booming - up by more than 40 per cent in August - but the outlook for iron ore prices may be grim.<br><br><div class="separator"><a href="/images/2016/09/01/TOT.jpg" target="_blank">Click to enlarge</a></div>
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<br>Tourism and education exports are also expected to be key contributors, a theme I've looked at quite a bit on this blog.<br><br><a href="/images/2016/09/01/Services.jpg" target="_blank">Click to enlarge</a><br><img src="/images/2016/09/01/Services.jpg" alt=""><br><br>
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<div><strong><span style="text-decoration: underline;">Government borrowing</span></strong></div>
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<div>While the government is making noises about trimming dollars and cents from its budget expenditure, behind the scenes the government is expected to keep borrowing hard, in part for infrastructure projects.<br><br>There are now $397 billion of Treasury bond securities across 23 lines on issue - a dozen of which have more at least A$20 billion outstanding - but look how low some of those coupon rates are...</div>
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<br><div class="separator">There are a further $30.6 billion of Treasury indexed bonds and $3.5 billion of Treasury notes, adding up to a total of <strong>$431.2 billion</strong> of government securities on issue. </div>
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<div class="separator">Fortunately bond yields are so low that the government can borrow at around the lowest yields on record without adding unduly to the interest burden.</div>
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<div class="separator">And government bonds on issue are expected to keep rising, with there having been strong inflows from Japan into Australia's debt securities over the last three years.</div>
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<div class="separator">Gross issuance of Treasury Bonds is expected to be A$90 billion in 2016-17, up marginally from last year, with net issuance of $68.9 billion (and an additional $3 billion of net issuance in Treasury Notes).</div>
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<div class="separator">That will take Australian government bonds on issue to well beyond 25 per cent of GDP (though Australia's net debt to GDP ratio is somewhat lower) - which is not really very high compared to other deficit countries - e.g. Japan, Canada, the United States, Greece, France, or the United Kingdom - but nevertheless moving in an unmistakeably northwards direction since the financial crisis took hold. </div>
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<div class="separator">How you feel about that really depends upon your position. Some argue that it's borrowing from the future. Others maintain that it makes a lot of sense to borrow for infrastructure projects when bond yields and coupon rates are so low, and while mining investment is still in freefall. </div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Government debt and the capex black hole: Pete Wargent

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<p>EXPERT OBSERVER</p>
<p>While Victoria and NSW have been hardest hit by the health crisis, Queensland’s job market has fared worst.</p>
<p>The Sunshine State’s unemployment rate was the highest in Australia at 8.8 per cent in July – a 19-year high. And 144,500 jobs were lost between February and July as international and state border closures impacted tourism. </p>
<p>Of the 20 regions with the highest unemployment rates in the land, Queensland had the highest representation with nine in July. Leading the way was Wide Bay, where the jobless rate rose by 8.2 percentage points - the second most in the nation - to 17 per cent. Next was the Queensland Outback (10.9 per cent), followed by Brisbane’s Moreton Bay South (10.5 per cent), Ipswich (10.1 per cent) and the Sunshine Coast (9.8 per cent). </p>
<p>But Western Australia also featured prominently. Apart from Mandurah’s nation-topping 18 per cent jobless rate, Perth’s North-West lost the most jobs (-30,200) between February and July. And Western Australia’s unemployment rate of 8.3 per cent is the second highest in Australia - now at 20-year highs. </p>
<p>Since the economy re-opened from the first virus lockdown in May, most jobs have been added or reinstated in Sydney’s Parramatta (+20,600) and Ryde (+14,600) with the NSW Central Coast (+14,400) the third best performing region. But the data excludes the impact of Victoria’s level four restrictions, which will feature prominently in the August update.</p>
<p><strong>What are the implications for investors?</strong> </p>
<p>After the historic plunge in Aussie jobs due to first virus lockdown in April, the labour market is showing tentative signs of improvement as restrictions are eased and the economy (outside of Victoria) is gradually reopened. </p>
<p>The July labour force report surprised on the upside, beating economist expectations of an addition of 30,000 jobs. In fact, employment rose in the month by 114,700. </p>
<p>But the nascent recovery in the job market is incredibly uneven. While Victoria is likely to lose the most jobs because of lockdown 2.0, Queensland and Western Australia - which have both enjoyed more success at containing and suppressing the virus - aren’t faring much better. Queensland is highly dependent on interstate and international tourism. And Western Australia continues to be captive to the fortunes of mining. </p>
<p>That said, with iron ore prices straddling 6½-year highs on the back of the Chinese industrial-led recovery, the Western Australian economy is well positioned to recover first from the COVID-19 recession. Already 19,100 jobs were added or reinstated in July with skilled job vacancies up by 11.3 per cent. </p>
<p>NSW is managing to keep Sydney’s virus flare ups at bay for now. NSW - which has lost 134,300 jobs since February - added 56,800 jobs in July. Jobs are returning in Parramatta, Ryde and the nearby NSW Central Coast. But unemployment is high in NSW tourism and retiree ‘lifestyle’ regions, such as Coffs Harbour-Grafton (11.6 per cent) and Newcastle &amp; Lake Macquarie (9.7 per cent). Policymakers certainly have a delicate balancing act addressing disparities in joblessness nationally. </p>
<p>China’s industrial recovery continues with the country on track to rebound quickest of all major economies from the virus economic contraction. While stimulus is feeding through to construction, manufacturing and infrastructure activity, policymakers remain wary given high debt levels. China’s Loan Prime Rates have been stable - keeping mortgage and corporate lending rates anchored at low levels - but the State Council has said that it will cut rates again to support still-weak domestic demand, if necessary.</p>
<p><strong>Ryan Felsman</strong> <em>is a Senior Economist at CommSec</em></p>
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j.ballantyne1990-6AQqhLzZaK

Double-digit regional unemployment rates: CommSec's Ryan Felsman

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<p>EXPERT OBSERVATION</p>
<p>This week we received important updates to the state of Australia’s labour market.</p>
<p>In times of economic crisis the labour market, quite rightly, attracts more attention than any other economic series.</p>
<p>The most indelible imprint that recessions make on economies is the legacy of high sustained unemployment.</p>
<p>Following the recession of the early 1980’s it took six years for the unemployment rate to return to its pre-recession level; after the early 1990’s recession it took fifteen years; and the 4% unemployment rate we enjoyed in the lead up to the Global Financial Crisis has never since been achieved – nearly thirteen years later.</p>
<p>On June 18 the ABS reported that the unemployment rate had jumped to 7.1% in May – the highest since October 2001.</p>
<p>Employment decreased by 227,700 following a 607,400 reduction in employment in April.</p>
<p>The unemployment rate would have been much higher if not for a number of factors:</p>
<p>Over the April-May period 623,600 people left the labour force (that is employed or actively looking for work and available for work) – largely, we expect, due to displaced workers being discouraged with the prospects of finding work; complications around school closures or the physical limitations of looking for work during a shutdown.</p>
<p>Without these people leaving the workforce the unemployment rate would have been 11.3%.</p>
<p>In May over 360,000 did not work at all but were categorised as “employed” because they still had an attachment to their employer (reasons include being stood down for less than four weeks; insufficient work; or no work available).</p>
<p>This represents a reduction from 750,000 in April as some workers who had been stood down transitioned to actually losing their jobs.</p>
<p>In May nearly 1.2 million did some work, but worked fewer hours than usual.</p>
<p><strong>BILL EVANS</strong> <em>is Westpac’s economic spokesman and the head of economic research</em></p>
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