SA employment growth is slowing but healthy
South Australia’s trend unemployment rate remained steady at 5.8 per cent in November. However, the October unemployment rate was revised up from 5.6 to 5.8 per cent taking into account information in the latest ABS Labour Force Survey. Thus the marked improvement in South Australia’s unemployment rate that has occurred through 2017 has slowed over recent months and may well have now run its course for the time being.
The state’s seasonally adjusted unemployment rate did rise by 0.3 percentage points to 6.1 per cent in November. This rise was due to more people looking for work rather than job losses stemming from the recent closure of Holden’s Elizabeth factory. However, it is important to note that the seasonally adjusted estimates are highly volatile and should not be interpreted literally. Indeed, the ABS recommends that trend estimates are the “best indicator of underlying behaviour for month-to-month” changes.
Perhaps the key takeaway from recent ABS labour force surveys is that employment growth in South Australia has moderated recently, but remains healthy. Year to growth in trend employment slowed from 1.8 per cent in August to 1.3 per cent in November. This pace is well above expansion of the working population (0.6 per cent), helping to push down unemployment. However, we do expect that employment growth will slow further as a consequence of recent auto job losses. In our December Briefing Report we forecast that total employment will grow by ¾ per cent in 2017/18.
At the national level, the trend unemployment rate remained unchanged at 5.4 per cent. In spite of a large rise in employment and fall in unemployment, the unemployment rate held firm as a participation rose. This continues a run of very good job reports for the nation.
Population growth remains slow due to interstate migration losses
Latest demographic statistics from the ABS show that population growth in South Australia remains subdued. The state’s estimated resident population rose by 0.6 per cent through the year to the June quarter 2017. In comparison, the national population rose by 1.6 per cent.
South Australia is not the only state with a slowly growing population at present. Western Australia (0.8 per cent), Tasmania (0.6 per cent) and the Northern Territory (0.1 per cent) have all experienced slow growth over the past year.
South Australia has experienced elevated levels of interstate emigration over the last couple years. For the year to the June quarter 2017, South Australia lost a net total of about 5,900 persons via interstate migration, down slightly from 6,400 persons over the previous year. The loss of population from interstate movements is broadly offsetting growth arising from natural increase (i.e. births less deaths), meaning overall expansion is being driven by overseas migration.
Residential property prices continue to rise slowly in Adelaide, show some signs of cooling elsewhere
Residential property prices in Adelaide rose by 0.7 per cent in the September quarter 2017 to be up 4.8 per cent compared to a year earlier. According to the ABS’s latest Residential Property Price Index (RPPI), property prices in Adelaide have now grown for 18 consecutive quarters.
The RPPI for the weighted average of the eight capital cities fell by 0.2 per cent in the recent September quarter but was still up 8.3 per cent over the year. The recent quarterly decline was brought about by falls for Sydney (-1.4 per cent), Perth (-1.0 per cent), Darwin (-2.6 per cent) and Canberra (-0.2 per cent). In contrast, property prices rose quite strongly in Hobart (up 3.4 per cent), and rose modestly in Melbourne (1.1 per cent) and Brisbane (0.7 per cent).
Residential property prices in Perth have fallen slowly for three consecutive years now. In the September quarter they were down 10 per cent from their peak in mid-2017. In light of concerns regarding potential price bubbles in eastern capitals, the recent Perth experience is a timely reminder that residential property prices do not always rise.