Unemployment rate stabilises, more full time jobs created despite downturn in employment growth

The September 2018 Labour Force Survey results – released by the ABS today – indicate that through mid 2018 the SA labour market has been in its best condition since 2012. However, improvements in the labour market appear to have now stalled.

In September 2018 the South Australian unemployment rate was 5.6 per cent, unchanged from its August level and down from 5.9 per cent a year earlier. The last time a lower unemployment rate was recorded was in 2012.

The SA unemployment rate of 5.6 per cent compares with a labour force underutilisation rate of 15.2 per cent, with the difference relating to persons who were employed but would like to have more hours of work (the underemployed). The underemployment rate fell slightly over the year to September.

South Australia’s current unemployment rate is relatively low by historical standards but the underutilisation rate is relatively high. Underemployment is now considerably more widespread than it was two or three decades ago. The same phenomenon can be seen around Australia.

South Australian employment has ceased growing in recent months, after reaching a peak in May. But in spite of the gradual decline recorded since then, September employment was still 1.3 per cent above the level recorded in September 2017. Similar patterns can be seen for full-time employment.

South Australia’s 5.6 per cent unemployment rate compares with a national unemployment rate of 5.2 per cent. This differential is relatively small by historical standards. Unemployment rates presently are low in NSW (4.5 per cent) and Victoria (4.7 per cent) but higher in Queensland and Western Australia (both 6.1 per cent) and Tasmania (5.9 per cent).

Home lending activity declines

ABS Housing Finance data released last week show that home lending activity is quite subdued in South Australia although still stronger than the lows reached in the early years of this decade.

The total number of new owner-occupier housing commitments – excluding loans for refinancing – in South Australia in August 2018 was 3 per cent lower than a year earlier. However, the value of new commitments was up 5 per cent through the year.

There has been a larger downturn nationwide, with new finance commitments for owner-occupiers down 8 per cent in number and 1 per cent in value.

The downturn in lending to owner occupiers is particularly pronounced in Western Australia (down 17 per cent in number through the year and nearly 40 per cent below the peak level recorded during the mining boom in 2012). There was also a 9 per cent fall in NSW, a 4 per cent fall in Victoria and a 6 per cent fall in Queensland.

Unfortunately the ABS does not produce trend estimates for the components of housing finance commitments for the individual States but we can to some extent abstract from the volatility in the data by considering three month moving totals. In the three months to August 2018 the number of new loans in South Australia for the construction or purchase of new dwellings was 6 per cent lower than a year earlier whereas loans for the purchase of established dwellings were down 3 per cent. Loans to first home purchasers were up 1 per cent while loans to non-first home purchasers were down 4 per cent.

Lending to investors shows a much more pronounced downturn: nationwide it fell by 18 per cent in value terms through the year to August compared with the 1 per cent fall in owner-occupier lending. State details are not available but anecdotal evidence suggests that a considerable slowing in the Sydney and Melbourne apartment markets is occurring.