South Australia records mixed labour market performance in October
South Australia’s trend unemployment rate fell to 5.6 per cent in October, down from 5.8 per cent in September. However, the improvement was partly driven by a decline in the participation rate, which fell by 0.1 percentage points to 61.9 per cent. This fall in participation explains why the number of unemployed persons fell (-1,467 persons) by much more than the number of jobs created (+474 persons).

The national trend unemployment rate remained steady at 5.5 per cent in October. Only New South Wales (4.7 per cent), the Northern Territory (4.2 per cent) and Australian Capital Territory (3.8 per cent) recorded lower trend unemployment rates than South Australia in October.

The latest ABS figures do not capture the full impact of the closure of Holden’s Elizabeth plant which occurred toward the end of the month. Job losses at the motor vehicle manufacturing plant and in the broader supply chain will put upward pressure on South Australia’s unemployment rate over subsequent months.

Wage growth remains sluggish
Wage growth in Australia remains weak with official figures released by the ABS on Wednesday showing no signs of improvement during the September quarter. The Wage Price Index (WPI) – a measure of the “price” of wages and salaries in the labour market – rose by 0.5 per cent in the September quarter in trend terms. This result was unchanged from the previous quarter, and growth has in fact remained stuck at around 0.5 per cent per quarter since mid-2015.

Through the year to the September quarter wages nationally rose by 2.0 per cent in trends terms. This compares with an annual average growth rate over the previous decade of 3.2 per cent.

State level data, which are only available on an original basis, show that wages growth for South Australia has tracked national movements. The WPI for South Australia rose by 0.9 per cent in the September quarter to be up 2.0 per cent through the year. In comparison, national wages on an original basis rose by 0.8 per cent in the September quarter to be up 2.0 percent through the year.

Sluggish wages growth is a significant concern since labour incomes are the primary determinant of households’ spending capacity, which in turn accounts for a majority of economic activity.

Costs pressures faced by local government rise
September quarter results for the Local Government Price Index (LGPI) were published by the SA Centre for Economic Studies yesterday. The LGPI represents a measure of price inflation faced by local government in respect of their purchases of goods and services.

The latest results show that price inflation faced by local government has continued to pick up over recent quarters. While the LGPI rose by 1.4 per cent through the year to the September quarter 2016, it rose by 2.5 per cent through the year to the September quarter 2017. In comparison, annual growth in the Adelaide Consumer Price index rose from 1.2 per cent to 1.8 per cent between these periods.

The lift in price inflation for local government has been brought about by higher prices for both recurrent and capital expenditures. In terms of the former, utility prices have grown much more strongly over the past year, while prices for capital expenditures such as road construction works and plant and equipment have exhibited stronger trends.

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Last month saw the publication of the fourth edition of “Thinking about Poverty”, edited by Klaus Serr, La Trobe University.

The book examines aspects of poverty and inequality in Australia from theoretical and empirical perspectives.

In their contribution on “Un(der)employment, Poverty and the Future of Work after the Global Financial Crisis”, SACES Senior Research Fellow Dr Andreas Cebulla and University of New South Wales Professor Ilan Katz describe how a rise in insufficient demand for labour following the onset of the GFC, reduced chances of jobseekers to regain equivalent jobs after retrenchment, and low replacement rates of social security allowances create conditions of sustained poverty risk.

The book is published by The Federation Press.


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South Australian merchandise exports remain at a strong level despite recent softening
The Australian Bureau of Statistics produces state level estimates of the value of overseas goods exports on a monthly basis. The latest estimates released last Thursday show that South Australia’s overseas goods exports have moderated over recent months, but remain well up compared to a year earlier.

The value of South Australia’s overseas goods exports for the three months to September 2017 was almost $3.0 billion measured on a free on board basis. The value of exports for this period was down 8.2 per cent compared to the previous 3 months to June 2017. Despite the recent fall, goods exports for the recent September quarter were still 20 per cent higher compared to the corresponding period a year earlier. This outcome reflects strong growth in overseas goods exports during the first half of 2017 following subdued performance in the second half of 2016.

The hefty rise in overseas goods exports through the year to the September quarter 2017 was brought about by large increases in exports for manufacturing (up $304 million / 20 per cent) and agriculture, forestry and fishing (up $123 million / 25 per cent). The growth in manufacturing exports was very much related to primary industries, with there being strong increases in manufacturing exports of food and live animals (up $119 million), and beverages and tobacco ($127 million), which mostly comprise wine. The other key goods producing sector – mining – also enjoyed a solid rise in exports over the past year ($34 million / 11 per cent).

Resurgence in building approval activity continues
As we have previously observed, building approvals for South Australia have risen strongly over the past year. ABS figures indicate that this pattern continued in September with the trend estimate of the value of total building jobs approved up 2.1 per cent. In comparison, national building approvals rose by 1.3 per cent. These results continue a recent pattern of stronger building approval activity for South Australia compared to Australia. Through the year to September 2017 the total value of building approved rose by 34 per cent for South Australia compared to 6.2 per cent for Australia.

The rise in total value of building approved for South Australia in September was driven by a solid rise in residential buildings approved (2.9 per cent), while non-residential building approvals were also stronger (0.8 per cent). Approvals for both forms of building activity have risen quite strongly over the past year (by 34 and 33 per cent respectively).

The number of dwelling units approved in South Australia rose by 1.5 per cent in September 2017 to be up 19 per compared to a year earlier. That the number of dwelling units approved has not risen as strongly as the value of residential buildings approved indicates that the average value of residential buildings approved has increased. Compositional changes in the types of dwelling units approved could also account for the rise in average value of residential buildings approved. Indeed, disaggregated data points to a shift over the past year towards increased approvals of new flats, units or apartments in large story blocks, combined with a substantial rise in the average value of these approvals. The average value of new houses approved has also risen modestly over this period (by 2.2 per cent through the year to the September quarter 2017 in original terms).

Retail sales remain flat
The underlying performance of South Australian retail sales continued to disappoint in September. Retail turnover in trend terms fell by 0.1 per cent in September, which is the third consecutive monthly fall. This recent deterioration follows strong growth during the first half of 2017.

The recent weakness in South Australian retail sales is consistent with national patterns. Australian retail sales were basically unchanged in September, and remained marginally lower compared to their level in June. Sluggish wages growth and sharp increases in utility bills have made for a challenging retail environment.

On a brighter note, the seasonally adjusted estimate of retail turnover for South Australia did rise by 0.7 per cent in September. While this result may point to an impending upturn in the retail sales cycle, monthly seasonally adjusted estimates are quite volatile, which means we will need to see sustained growth in the seasonally adjusted estimates for a couple more months to confirm an improvement in the underlying trend.

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The Commonwealth Treasurer and the Productivity Commission (PC) seem intent on providing a greater share of goods and services tax (GST) grants to Western Australia (WA).
But do you have to change the definition of horizontal fiscal equalization (HFE) to deliver a fiscal advantage to WA, being the outlier fiscally strongest State, at the expense of […]

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Australian economy grows weakly
Australia’s real Gross Domestic Product (GDP) rose by 2.0 per cent in 2016/17, according to the annual national accounts released by the Australian Bureau of Statistics last Friday. This GDP result is the weakest since 2008/09 (1.9 per cent) when the Global Financial Crisis triggered a global recession.
Disappointing GDP growth was in […]

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Unemployment continues to decline
South Australia’s trend unemployment rate fell below 6 per cent in September for the first time since early 2013. ABS Labour Force Survey figures show that the trend unemployment rate fell to 5.8 per cent, down from 6.0 per cent in August. This decline was foreshadowed by a significant fall in the […]

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The most significant economic development in South Australia this week will of course be the cessation of local motor vehicle production when Holden ends manufacturing operations at its Elizabeth plant this Friday. About 950 employees will be directly affected by the closure, while additional jobs will be lost through the supply chain. Adjustment to the […]

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Building Approvals Rise Strongly
South Australian building approvals rose strongly once again in August, which suggests that activity in the local construction sector should remain quite solid through the remainder of the year. The trend estimate of the total value of building jobs approved rose by 6.9 per cent in August to be up 35 per […]

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A study recently published by researchers at SACES tested how the pathways young people follow from school into the labour market influence their long-run earnings, personal debt and satisfaction with employment opportunities.
The study by Andreas Cebulla and Steve Whetton analysed data on a cohort of people aged 15 to 24 years in the first year of […]

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Population growth remains slow as interstate emigration remains strong
The Australia Bureau of Statistics most recent estimates of resident population for the states and territories show that South Australia continues to endure relatively slow population growth. South Australia’s population grew by 0.6 per cent through the year to the March quarter 2017, down slightly from 0.7 […]

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