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ANZ RESEARCH

AUSTRALIAN ECONOMICS AUSTRALIAN ECONOMIC UPDATE


MINING AND RELATED EMPLOYMENT STABILISES, WHILE CONSTRUCTION JOBS STRENGTHEN FURTHER; REDUNDANCIES DECLINE 25 MARCH 2013 CONTRIBUTORS
Justin Fabo Head of Australian Economics, Corporate & Commercial +61 2 9227 1646 Justin.Fabo@anz.com

The ABS released its quarterly detailed labour force statistics for the three months to February late last week. Aggregate employment is estimated to have increased by around 190,000 persons (or 1.7%) over the year to February. This includes, however, a large 70,000 increase in employment in the month of February 2013, of which nearly half was due to sample rotation according to the ABS. For this reason, some caution needs to be used when interpreting changes in employment at the industry level over the three months to February and over the year. The key points of the detailed labour force release are below and are summarised in Figures 1 and 2: the number of involuntary job losers declined over the three months to February after increasing significantly last year due to higher redundancies; mining employment rose modestly over the three months to February, with gains in WA and Queensland offset by further weakness in coal mining employment in NSW; wholesale trade employment 4% of the total is estimated to have risen by a sharp 40,000 persons over the three months to February and by 65,000 persons, or 16%, over the year. Some of this strength is likely to be statistical noise. Nevertheless, strong jobs growth over the year in motor vehicle wholesaling and grocery, liquor & tobacco wholesaling appears consistent with heightened activity in these sectors. A large share of the increase was in NSW. Transport employment largely road transport also rose strongly over the year to February, presumably related to strength in wholesale activity but also mining-related activity; growth in hospitality employment was also robust over the three months to February and over the year. This appears to have been largely concentrated in NSW and mostly in food & beverage services but is at odds with weak output growth in this industry; construction employment rose for the second consecutive quarter, broadly in line with a modest pick-up in construction output; public administration employment rose over the most recent three months and in a relatively broad-based fashion across states after significant prior weakness. This seems at odds with the tight rein on government spending at the federal and state levels. Health and education employment also continued to trend strongly higher; manufacturing employment fell sharply over the three months to February, with weakness broadly based across states. This followed some resilience in 2012 but over the past three years manufacturing employment has been the weakest of all industries (Figure 3); and business services employment declined modestly over the most recent three months and over the year. Presumably this partly reflects cost-cutting across a range of businesses.

The Appendix shows changes in industry-level employment for the major states over the year to February.

Australian Economic Update / 25 March 2013 / 2 of 16

FIGURE 1. CHANGE IN EMPLOYMENT BY INDUSTRY, YEAR TO FEBRUARY 2013


Manufacturing Rental, Hiring and Real Estate Services Other Services Public Administration and Safety Electricity, Gas, Water and Waste Services Agriculture, Forestry and Fishing Financial and Insurance Services Administrative and Support Services Information Media and Telecommunications Arts and Recreation Services Retail Trade Construction Mining Professional, Scientific and Technical Services Health Care and Social Assistance Transport, Postal and Warehousing Education and Training Accommodation and Food Services Wholesale Trade TOTAL

-40

40

80

120

160

200

'000 change in employment, year to February 2013

Source: ABS FIGURE 2. EMPLOYMENT BY INDUSTRY, AUSTRALIA FEBRUARY 2013


Employment (sa) 000s Agriculture Mining Manufacturing Utilities Construction Wholesale trade Retail trade Hospitality Transport & postal IT, media & telecomms Finance & insurance Rental & real estate Professional services Administrative services Public admin. Education Health Arts & recreation Other services All Industries 321.2 265.7 941.4 137.1 1,026.6 462.8 1,217.7 800.1 605.1 217.4 412.1 199.3 919.1 395.8 722.4 924.8 1,393.8 200.6 453.4 11,616.4 % of total 2.8 2.3 8.1 1.2 8.8 4.0 10.5 6.9 5.2 1.9 3.5 1.7 7.9 3.4 6.2 8.0 12.0 1.7 3.9 100.0 Employment q/q change '000 3.4 2.4 -30.8 -8.5 16.5 39.5 -4.2 15.6 4.3 -4.2 -7.0 2.5 15.1 -3.4 25.8 26.0 22.5 -10.3 -2.8 102.5 % 1.1 0.9 -3.2 -5.8 1.6 9.3 -0.3 2.0 0.7 -1.9 -1.7 1.3 1.7 -0.9 3.7 2.9 1.6 -4.9 -0.6 0.9 Employment y/y change '000 -15.5 15.1 -28.9 -18.5 14.1 65.5 10.4 58.3 55.5 -5.9 -12.9 -25.5 31.8 -8.2 -19.2 54.8 46.3 -1.8 -23.8 191.4 % -4.6 6.0 -3.0 -11.6 1.4 16.5 0.9 7.9 10.1 -2.7 -2.8 -11.4 3.6 -2.0 -2.6 6.7 3.4 -0.6 -5.0 1.7 Average annual growth since 2000 % -2.5 9.6 -0.7 5.0 3.0 0.4 1.5 2.0 2.4 -0.1 1.7 3.0 3.6 2.0 3.0 2.9 4.1 3.1 0.8 2.1 Aggregate hours worked y/y% -2.7 4.9 -1.4 -16.2 2.5 14.3 -0.7 4.8 9.1 -2.1 -5.5 -6.9 5.2 -1.4 -2.7 8.4 1.8 1.6 -6.5 1.4

Source: ABS FIGURE 3. CHANGE IN EMPLOYMENT BY INDUSTRY, THREE YEARS TO FEBRUARY 2013
Manufacturing Agriculture, Forestry and Fishing Other Services Financial and Insurance Services Administrative and Support Services Arts and Recreation Services Electricity, Gas, Water and Waste Services Information Media and Telecommunications Wholesale Trade Retail Trade Construction Rental, Hiring and Real Estate Services Public Administration and Safety Transport, Postal and Warehousing Professional, Scientific and Technical Services Accommodation and Food Services Education and Training Mining Health Care and Social Assistance

-80

-40

40

80

120

160

200

'000 change in employment over past 3 years

Source: ABS

Australian Economic Update / 25 March 2013 / 3 of 16

REDUNDANCIES DECLINE After a clear increase in the number of redundancies in 2012, the number of unemployed classified as involuntary job losers declined over the three months to February (Figure 4). By state, most of the fall in involuntary job losers was centred in Queensland (Figure 5). This possibly reflects that most of the publicsector job cuts announced in mid 2012 had been completed by the end of the year.
FIGURE 4. REASONS UNEMPLOYED ARE LOOKING FOR FULL-TIME WORK
60 Share of total persons looking for full-time work

50

40

30

20

10

0 86 88 90 92 94 96 98 00 02 04 06 08 10 12 Involuntary job loser Voluntary job leaver Former worker Never worked

Sources: ABS, ANZ FIGURE 5. NUMBER OF UNEMPLOYED* INVOLUNTARY JOB LOSERS BY STATE
140 10.5

120

9.0

100

7.5

80 000s

6.0

000s

60

4.5

40

3.0

20

1.5

0 86 89 92 95 Vic 98 01 04 QLD 07 10 13 SA 88 91 WA 94 97 00 Tas 03 06 09 12

0.0

NSW

ACT

NT

* Seeking full-time employment

Sources: ABS, ANZ

EMPLOYMENT BY INDUSTRY: SELECTED HIGHLIGHTS MINING EMPLOYMENT STABILISES Mining employment appears to be recovering slowly after a weak patch last year amid sharply lower commodity prices. ABS data suggest that mining employment in Queensland rebounded to a new high as coal mining employment recovered (Figures 6 & 7). Mining employment in Western Australia increased modestly over the three months to February despite a further fall in metal ore mining employment (the rise appears to have been in exploration and other mining services).

Australian Economic Update / 25 March 2013 / 4 of 16

In contrast, and consistent with anecdotal evidence, mining employment in NSW, particularly coal mining jobs, continued to fall over the three months to February. Looking ahead, the relatively high labour costs in mining suggests that growth in mining employment is unlikely to match that in the period leading up to mid 2012 (Figure 8).
FIGURE 6. MINING EMPLOYMENT BY STATE
120 18

100 Employed persons (000s, sa)

15
Employed persons (000s, sa)

80

12

60

40

20

0 84 87 90 93 96 99 02 05 08 11 85 88 91 94 97 00 03 06 09 12 NSW Victoria Queensland WA SA (RHS) Tasmania (RHS)

0 NT (RHS)

Sources: ABS, ANZ FIGURE 7. COAL AND METAL ORE MINING EMPLOYMENT
70 Coal mining employment Metal ore mining employment 105

Number of employed, seasonally adjusted

60 Total 50 Total

90

Number of employed, seasonally adjusted

75

40

60

30 Queensland Western Australia 10 NSW 0 00 01 03 04 06 07 09 10 12 13 01 02 04 05 07 08 10 11 13

45

20

30

15

Sources: ABS, ANZ

Australian Economic Update / 25 March 2013 / 5 of 16

FIGURE 8. WAGES AS A PER CENT OF SALES REVENUE


22

19 Wages as % of nominal sales

16

13

10

7 01 02 03 04 Mining 05 06 07 08 09 10 Total 11 12 Non-mining

Source: ABS

Employment in some sectors that have benefited from the mining investment boom remained strong over the three months to February. Employment in architectural, engineering & technical services bounced back, generating most of the gain in overall professional, scientific and technical services employment over that period (Figure 9). By state, this strength was most pronounced in WA and Victoria but also picked up in other states, including South Australia and Tasmania (Figure 10). Likewise, employment growth in road transport has been very strong but this may temper due to the lagged effects of weaker output growth in that industry (Figure 11).
FIGURE 9. PROFESSIONAL SERVICES EMPLOYMENT BREAKDOWN, AUSTRALIA
300

250 000s, seasonally adjusted

200

150

100

50

0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Architectural, Engineering and Technical Services Management and Related Consulting Services Other Legal and Accounting Services Computer System Design and Related Services

Sources: ABS, ANZ

Australian Economic Update / 25 March 2013 / 6 of 16

FIGURE 10. ARCHITECTURAL & ENGINEERING SERVICES EMPLOYMENT BY STATE


80 70 60 50 40 30 20 10 0 95 96 NSW 97 98 99 00 01 02 03 04 05 06 07 08 09 WA 10 11 12 13 Victoria Queensland Other

Sources: ABS, ANZ FIGURE 11. ROAD TRANSPORT EMPLOYMENT AND OUTPUT GROWTH
20

000s, seasonally adjusted y/y % change

15

10

-5

-10

-15 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Road transport employment Road transport output (forward 5 qtrs, trend)

Sources: ABS, ANZ

Other business services employment has been soft, in part likely reflecting a keen focus on costs among businesses in general. Over the year to February, much of the weakness in finance & insurance employment was at depository institutions, while the contraction in rental & real estate employment was concentrated in property managers which had grown strongly over the previous year. The contraction in other services employment over the year to February was more than accounted for by a fall in machinery & equipment repair & maintenance, which could be partly related to cost cutting in the mining industry. CONSTRUCTION EMPLOYMENT RISES FURTHER Construction employment rose further over the three months to February, broadly in line with a modest pick up in building output (Figure 12). Construction employment rose further in Victoria after a surprisingly large increase over the three months to November, while Queensland also recorded a solid increase (Figure 13). In contrast, construction employment in NSW, South Australia and Tasmania remained relatively subdued.

Australian Economic Update / 25 March 2013 / 7 of 16

Despite weak building construction employment in recent years, construction jobs tied to the mining investment boom have grown strongly. This can be seen in strong growth in construction services (until recently) and construction not further defined (nfd) employment (Figure 14).
FIGURE 12. CONSTRUCTION OUTPUT AND EMPLOYMENT
25 1250

$billions, real output per quarter

20

1000

15

750 000s

10

500

250

0 85 87 89 91 93 95 97 99 Private building work done (real, LHS) Construction employment (RHS) 01 03 05 07 09 11 13 Public building work done (real, LHS)

Sources: ABS, ANZ FIGURE 13. CONSTRUCTION EMPLOYMENT BY STATE


320 280 Employed persons (000s, sa) 240 200 160 120 80 40 0 84 87 90 93 96 99 02 05 08 11 85 88 91 94 97 00 03 06 09 12 NSW Victoria Queensland WA SA (RHS) Tasmania (RHS) NT (RHS) 80 70
Employed persons (000s, sa)

60 50 40 30 20 10 0

Sources: ABS, ANZ

Australian Economic Update / 25 March 2013 / 8 of 16

FIGURE 14. CONSTRUCTION EMPLOYMENT BY SUB-SECTOR


300 800

250 000s, 4 quarter average

750
000s, 4 quarter average

200

700

150

650

100

600

50

550

0 04 05 06 07 08 09 10 11 12 13 Construction nfd (LHS) Heavy and Civil Engineering (LHS) Building construction (LHS) Construction services (RHS)

500

Source: ABS PUBLIC-SECTOR EMPLOYMENT SHOWS SURPRISING REBOUND Public administration and safety employment was estimated to have risen by around 25,000 persons over the three months to February but remained lower in year-ended terms. The recent strength was purportedly in the large states of Victoria, NSW and Queensland but this is difficult to gel with the tight rein on public spending (Figure 15). However, employment in hospitals appears to have declined noticeably over the six months to February, possibly reflecting government cost cutting. Health and education employment, which have been generally much less affected by tighter government finances, continued to trend strongly higher over the three months to February (Figure 16). Employment in health and education now accounts for one if five jobs in Australia and has risen much faster than employment in other industries for an extended period. The trend increase in health employment can clearly be seen across all states (Figure 17).
FIGURE 15. PUBLIC ADMINISTRATION EMPLOYMENT BY STATE
250 40

200 Employed persons (000s, sa)

32

Employed persons (000s, sa)

150

24

100

16

50

0 84 87 90 93 96 99 02 05 08 11 85 88 91 94 97 00 03 06 09 12 NSW ACT Victoria SA (RHS) Queensland Tasmania (RHS) WA NT (RHS)

Sources: ABS, ANZ

Australian Economic Update / 25 March 2013 / 9 of 16

FIGURE 16. HEALTH & EDUCATION VS OTHER INDUSTRIES EMPLOYMENT


145 140 135 January 2005 = 100 130 125 120 115 110 105 100 95 05 06 07 08 09 10 11 12 13 Education & training Health Care and Social Assistance Other industries

Sources: ABS, ANZ FIGURE 17. HEALTH EMPLOYMENT BY STATE


500 40

400 Employed persons (000s, sa)

32

Employed persons (000s, sa)

300

24

200

16

100

0 84 87 90 93 96 99 02 05 08 11 85 88 91 94 97 00 03 06 09 12 NSW WA Victoria Tasmania (RHS) Queensland ACT (RHS) SA NT (RHS)

Sources: ABS, ANZ

MANUFACTURING EMPLOYMENT FALLS AFTER SHOWING SUPRISING RESILIENCE TO HIGHER AUSTRALIAN DOLLAR Manufacturing employment declined by around 30,000 persons over the three months to February, with declines recorded across most states (Figure 18). Manufacturings share of aggregate employment had remained relatively steady over the prior year despite significant pressure on parts of the industry from the high Australian dollar (Figure 19).

Australian Economic Update / 25 March 2013 / 10 of 16

FIGURE 18. MANUFACTURING EMPLOYMENT BY STATE


450 400 Employed persons (000s, sa) 350 300 250 200 150 100 50 84 87 90 93 96 99 02 05 08 11 85 88 91 94 97 00 03 06 09 12 NSW Victoria Queensland SA WA Tasmania (RHS) NT (RHS) 32 28
Employed persons (000s, sa)

24 20 16 12 8 4 0

Sources: ABS, ANZ FIGURE 19. SHARE OF EMPLOYMENT BY INDUSTRY, AUSTRALIA


20 80

Per cent of total employment

Per cent of total employment

15

75

10

70

65

0 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 Agriculture (LHS) Manufacturing (LHS) Construction (LHS) Services (RHS) Mining (LHS)

60

Source: ABS

RETAIL TRADE EMPLOYMENT REMAINED WEAK BUT WHOLESALE TRADE AND ACCOMMODATION AND FOOD SERVICES EMPLOYMENT HAS BEEN STRONG Retail trade employment fell in the most recent three months and rose only modestly over the year to February (Figure 20). Reflecting consumption patterns at the state level, most of the strength in retail employment has been in Western Australia (Figure 21). By sub-sector, falls in employment in specialised food, electrical goods, hardware and clothing retailing have been offset by gains in supermarket, department store, non-store and other retailing.

Australian Economic Update / 25 March 2013 / 11 of 16

FIGURE 20. RETAIL TRADE VS RETAIL SALES VOLUMES


10

6 y/y % change

-2

-4 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Retail trade employment Real retail sales, 12m forward

Source: ABS FIGURE 21. RETAIL TRADE EMPLOYMENT BY STATE


500 40

400 Employed persons (000s, sa)

32

Employed persons (000s, sa)

300

24

200

16

100

0 84 87 90 93 96 99 02 05 08 11 85 88 91 94 97 00 03 06 09 12 NSW WA Victoria Tasmania (RHS) Queensland ACT (RHS) SA NT (RHS)

Sources: ABS, ANZ

Despite the softness in retail trade employment, jobs growth has been much stronger in the wholesale trade industry. Some of this strength, however, is likely to be statistical noise as it is difficult to fathom how a sector that accounts for 4% of total employment could create around one-third of aggregate employment growth over the year. While strong growth in motor vehicle and grocery wholesale employment is consistent with robust output growth in these sub-sectors, it is difficult to explain the strength in timber and hardware wholesaling employment (Figure 22). It is possible that the expansion of major hardware chains in Australia has supported growth in hardware at the wholesale level, timber wholesaling would surely be feeling the adverse effects of weakness in the detached housing market. Strong growth in wholesale trade not further defined employment may be related to strong online retail sales growth.

Australian Economic Update / 25 March 2013 / 12 of 16

FIGURE 22. WHOLESALE TRADE EMPLOYMENT GROWTH BY SUB-SECTOR


Change in employment over year to February 2013, 000s 20 18 16 14 12 10 8 6 4 2 0
Timber and Hardware Goods Wholesaling Motor Vehicle and Motor Vehicle Parts Wholesaling Grocery, Liquor Pharmaceutical and Tobacco and Toiletry Product Goods Wholesaling Wholesaling Wholesale Trade, not further defined Other

Source: ABS

Employment also increased sharply in the accommodation & food services industry, particularly in NSW, in the most recent three months and over the year (Figure 23). Year-ended growth, however, is overstated due to a temporary fall in employment in February 2013 (which looks like statistical noise) but even in trend terms appears out of line with weak output growth in the industry (Figure 24). The pattern in employment in the industry has been mixed, however, across states. In Queensland, for example, the relative weakness in tourism in that state has meant that growth in hospitality employment has slowed sharply in recent years relative to earlier periods.
FIGURE 23. ACCOMMODATION & FOOD SERVICES EMPLOYMENT BY STATE
300 72

250 Employed persons (000s, sa)

60
Employed persons (000s, sa)

200

48

150

36

100

24

50

12

0 84 87 90 93 96 99 02 05 08 11 85 88 91 94 97 00 03 06 09 12 NSW SA (RHS) Victoria Tasmania (RHS) Queensland ACT (RHS) WA NT (RHS)

Sources: ABS, ANZ

Australian Economic Update / 25 March 2013 / 13 of 16

FIGURE 24. ACCOMMODATION & FOOD SERVICES OUTPUT & EMPLOYMENT GROWTH
14 12 10 8 y/y % change 6 4 2 0 -2 -4 -6 90 92 94 96 98 00 02 04 06 08 10 12 Hospitality output growth Hospitality employment growth (trend)

Source: ABS

Australian Economic Update / 25 March 2013 / 14 of 16

APPENDIX CHANGE IN EMPLOYMENT BY STATE, YEAR TO FEBRUARY 2013 NSW


Public Administration and Safety Construction Retail Trade Financial and Insurance Services Professional, Scientific and Technical Services Other Services Information Media and Telecommunications Administrative and Support Services Mining Electricity, Gas, Water and Waste Services Rental, Hiring and Real Estate Services Agriculture, Forestry and Fishing Manufacturing Arts and Recreation Services Transport, Postal and Warehousing Health Care and Social Assistance Education and Training Wholesale Trade Accommodation and Food Services TOTAL Manufacturing Administrative and Support Services Other Services Rental, Hiring and Real Estate Services Electricity, Gas, Water and Waste Services Agriculture, Forestry and Fishing Arts and Recreation Services Mining Public Administration and Safety Wholesale Trade Information Media and Telecommunications Education and Training Financial and Insurance Services Professional, Scientific and Technical Services Health Care and Social Assistance Transport, Postal and Warehousing Construction Accommodation and Food Services Retail Trade TOTAL

Victoria

-30

-20 -10 0 10 20 30 40 50 60 70 '000 change in employment over the year to February

80

-20

-10 0 10 20 30 40 50 '000 change in employment over the year to February

60

Queensland
Electricity, Gas, Water and Waste Services Manufacturing Rental, Hiring and Real Estate Services Arts and Recreation Services Agriculture, Forestry and Fishing Retail Trade Information Media and Telecommunications Education and Training Financial and Insurance Services Administrative and Support Services Accommodation and Food Services Public Administration and Safety Health Care and Social Assistance Wholesale Trade Other Services Mining Professional, Scientific and Technical Services TOTAL Transport, Postal and Warehousing Construction Agriculture, Forestry and Fishing Manufacturing Financial and Insurance Services Arts and Recreation Services Other Services Retail Trade Electricity, Gas, Water and Waste Services Accommodation and Food Services Construction Professional, Scientific and Technical Services Administrative and Support Services TOTAL Rental, Hiring and Real Estate Services Information Media and Telecommunications Mining Transport, Postal and Warehousing Public Administration and Safety Education and Training Wholesale Trade Health Care and Social Assistance

South Australia

-20

-15 -10 -5 0 5 10 15 20 '000 change in employment over the year to February

25

-15

-10 -5 0 5 '000 change in employment over the year to February

10

Western Australia
Rental, Hiring and Real Estate Services Other Services Manufacturing Health Care and Social Assistance Accommodation and Food Services Financial and Insurance Services Construction Arts and Recreation Services Public Administration and Safety Information Media and Telecommunications Wholesale Trade Agriculture, Forestry and Fishing Education and Training Mining Electricity, Gas, Water and Waste Services Administrative and Support Services Transport, Postal and Warehousing Retail Trade Professional, Scientific and Technical Services TOTAL Construction Public Administration and Safety Agriculture, Forestry and Fishing Wholesale Trade Retail Trade Accommodation and Food Services Information Media and Telecommunications Rental, Hiring and Real Estate Services Arts and Recreation Services Other Services Transport, Postal and Warehousing Electricity, Gas, Water and Waste Services Financial and Insurance Services TOTAL Health Care and Social Assistance Administrative and Support Services Mining Professional, Scientific and Technical Services Manufacturing Education and Training

Tasmania

-10

-5 0 5 10 15 20 25 30 35 '000 change in employment over the year to February

40

-3

-2 -1 0 1 2 3 4 '000 change in employment over the year to February

Australian Economic Update / 25 March 2013 / 15 of 16

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Australian Economic Update / 25 March 2013 / 16 of 16

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