South Australian Data Wrap – unemployment declines while Census data reveals structural changes

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 seasonally adjusted rate last month. While the seasonally adjusted rate rose slightly in September to 5.8 per cent from 5.7 per cent in August, it was still 1.0 percentage points lower compared to just 4 months earlier.

The trend estimate of employed persons rose by approximately 1,500 persons in September, while unemployed persons fell by 2,100 persons. The difference between these two figures indicates that reduced labour force participation partly accounted for the drop in unemployment. The participation rate fell by 0.1 percentage points to 62.1 per cent in September.

Although South Australia’s trend unemployment rate remained a little higher compared to the national rate (5.5 per cent), the significant decline achieved over recent months means the state no longer has the highest unemployment rate in the nation. Victoria (6.0 per cent), Tasmania (5.9 per cent) and Queensland (5.9 per cent) all had marginally higher unemployment rates in September.

The substantial improvement in South Australian labour market conditions over the past year is a timely development given the negative impact that will flow from the end of local motor vehicle manufacturing with the closure of GM Holden’s Elizabeth plant last Friday. About 950 people are directly affected by the closure of the plant. If all these workers were to shift to unemployment, the effect would be to increase the unemployment rate by 0.1 percentage points. Of course, the impact on unemployment will be mitigated to the extent that Holden workers have already secured alternative employment, choose to move interstate to pursue opportunities elsewhere, or retire. On the other hand there will be additional job losses through the supply chain.

Census data reveals structural changes in the South Australian economy
On Monday the ABS released the second round of 2016 Census data, which includes data in respect of employment, education and mobility. We briefly review the data on employment by industry as this provides insight into structural changes within the South Australian economy over the past 5 years.

Consistent with longer terms trends, the latest Census data indicates that employment in manufacturing has continued to contract over the past 5 years. The manufacturing sector’s share of total employment was 8.0 per cent in 2016, down from almost 11 per cent in 2011. The 2.5 percentage point decline in manufacturing’s share of total employment was the largest relative change – positive or negative – for any industry sector. This experience was not restricted to South Australia as manufacturing recorded a similar decline at the national level (down 2.6 percentage points to 6.4 per cent of total employment).

Other broad industry sectors that recorded relatively large declines in their share of total employment for South Australia over the 5 years to 2016 included wholesale trade (down 0.7 percentage points to 2.8 per cent) and retail trade (down 0.5 percentage to 10.7 per cent). The shift to online shopping, consolidation in the sector  and productivity improvements may all have contributed to the relative decline in employment in these two sectors. Finance and insurance recorded the next largest relative decline in share of total employment (down 0.3 percentage points to 2.7 per cent).

Turning to growth sectors, share of total employment between the last two Censuses rose most strongly for the ‘health care and social assistance’ (up 1.2 percentage points to almost 15 per cent), ‘education and training’ (up 0.7 percentage points to 8.6 per cent), and ‘accommodation and food services’ sectors (up 0.4 percentage points to 6.7 per cent).

Employment shares for most other industry sectors were remarkably stable, with shares typically rising or falling by just 0.1 percentage points. This stability is in part symptomatic of the weakness in employment growth between 2011 and 2016; total employed persons rose by just 0.9 per cent over this period, compared to a rise of 7.2 per cent between 2006 and 2011.

The largest employing sectors in 2016 were ‘healthcare and social assistance’ (15 per cent), followed by ‘retail trade’ (11 per cent), ‘education and training’ (8.6 per cent), ‘manufacturing’ (8.0 per cent) and ‘construction’ (7.6 per cent). The smallest employing industries were ‘utilities’ (1.2 per cent), ‘mining’ (1.2 per cent), ‘information media and telecommunications’ (1.3 per cent), ‘rental, hiring and real estate services’ (1.3 per cent), and ‘arts and recreation services’ (1.4 per cent).




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