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 per cent over the corresponding period a year earlier. In comparison, Australia’s population growth has picked up from 1.4 per cent to 1.6 per cent over the last two years.
Sluggish population growth in not only a South Australian phenomenon at present. Western Australia (0.7 per cent), Tasmania (0.6 per cent) and the Northern Territory (0.1 per cent) all experienced sluggish population growth over the past year.
South Australia’s population growth continues to be held back by significant net interstate emigration flows that have increased over the past two years. For the year to the March quarter 2017, South Australia lost a net total of 6,541 people via interstate migration, up from a loss of 5,887 people in the year to March quarter 2016, and a loss of 2,966 persons in the year to March quarter 2015.
Engineering construction rises strongly
Engineering construction is an important component of the construction sector. ABS estimates released for the June quarter show that engineering construction activity in South Australia rose strongly in the first half of the year. The volume of engineering construction work done in trend terms rose by 9.4 per cent in the June quarter 2017 to be up 28 per cent compared to a year earlier. This is a strong performance in the context of national results. The value of engineering work done nationally rose by 0.8 per cent in the June quarter but remained 4.2 per cent below its level compared to a year earlier.
The lift in engineering construction activity for South Australia has been driven primarily by increased work done for the public sector, due mainly to major road transport infrastructure upgrade projects. However, there has also been signs of improvement in private sector activity with work done on heavy industry recovering over recent quarters while there has been an increase in activity related to electricity generation and transmission infrastructure over the past year.
Job vacancies decline
Job vacancies data are a useful leading indicator of employment growth. In this context the latest results for South Australia from the ABS’s Job Vacancies Survey are somewhat disappointing. There were an estimated 9,100 job vacancies in South Australia in August 2017, a decrease of 13 per cent from May 2017. This result was in contrast to the national trend, whereby the number of job vacancies in August was up 3.9 per cent in trend terms (state estimates are only available in original terms).
The recent dip in job vacancies for South Australia is a potential sign that the recent strengthening in labour market conditions may ease.
Are there signs wages growth will finally take off?
Stagnation in wages despite tightening labour market conditions has been a striking characteristic of many advanced economies since the Great Recession. The decline in wage growth has been quite marked for Australia with nominal wages currently growing at a historically sluggish rate. With national labour market conditions improving considerably in 2017, can we expect that wages growth will soon follow?
Recent analysis by National Australia Bank economists suggests that strong employment growth in some industry sectors is translating into higher advertised salaries. Together with reduced labour market slack in the form of lower underemployed, this evidence tentatively “suggests that the low point in wages growth is passing”. However, as the NAB notes, 91 per cent of Australia’s employment growth over the past year was accounted for by just 4 industry sectors: education and training; healthcare and social assistance; construction; and accommodation and food services. That recent employment growth has been so narrowly based suggests that wage pressures more broadly may remain quite low, which must raise some doubt over whether we are indeed about to see wages growth finally take off.