Double-digit regional unemployment rates
Detailed labour force estimates; Chinese data
Highest jobless rates: Mandurah in Western Australia had the highest jobless rate across Australia in July at 18 per cent. Unemployment rates are also high in Wide Bay, Queensland (17 per cent), Melbourne’s North-West (12.6 per cent) and Coffs Harbour-Grafton, NSW (11.6 per cent). Queensland has the highest unemployment rate at 8.8 per cent and nine of the top 20 regional jobless rates in Australia.
China interest rates: China’s 1-year loan prime rate was left at 3.85 per cent in August. And the 5-year loan prime rate was also unchanged at 4.65 per cent.
A raft of companies is affected by the employment data but especially those dependent on consumer spending. The Chinese data is important for exporters, especially rural producers, consumer goods, mining and energy companies.
What does it all mean?
• While Victoria and NSW have been hardest hit by the health crisis, Queensland’s job market has fared worst. The Sunshine State’s unemployment rate was the highest in Australia at 8.8 per cent in July – a 19-year high. And 144,500 jobs were lost between February and July as international and state border closures impacted tourism.
• Of the 20 regions with the highest unemployment rates in the land, Queensland had the highest representation with nine in July. Leading the way was Wide Bay, where the jobless rate rose by 8.2 percentage points – the second most in the nation – to 17 per cent. Next was the Queensland Outback (10.9 per cent), followed by Brisbane’s Moreton Bay South (10.5 per cent), Ipswich (10.1 per cent) and the Sunshine Coast (9.8 per cent).
• But Western Australia also featured prominently. Apart from Mandurah’s nation-topping 18 per cent jobless rate, Perth’s North-West lost the most jobs (-30,200) between February and July. And Western Australia’s unemployment rate of 8.3 per cent is the second highest in Australia – now at 20-year highs.
• Since the economy re-opened from the first virus lockdown in May, most jobs have been added or reinstated in Sydney’s Parramatta (+20,600) and Ryde (+14,600) with the NSW Central Coast (+14,400) the third best performing region. But the data excludes the impact of Victoria’s level four restrictions, which will feature prominently in the August update.
What is the importance of the economic data?
• The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel. Detailed demographic and regional information is provided a week after top level estimates.
• China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 19th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10th of each month. China is Australia’s largest trading partner and changes in the Chinese economy have major implications for the Aussie economy.
What are the implications for investors?
• After the historic plunge in Aussie jobs due to first virus lockdown in April, the labour market is showing tentative signs of improvement as restrictions are eased and the economy (outside of Victoria) is gradually reopened.
• The July labour force report surprised on the upside, beating economist expectations of an addition of 30,000 jobs. In fact, employment rose in the month by 114,700.
• But the nascent recovery in the job market is incredibly uneven. While Victoria is likely to lose the most jobs because of lockdown 2.0, Queensland and Western Australia – which have both enjoyed more success at containing and suppressing the virus – aren’t faring much better. Queensland is highly dependent on interstate and international tourism. And Western Australia continues to be captive to the fortunes of mining.
• That said, with iron ore prices straddling 6½-year highs on the back of the Chinese industrial-led recovery, the Western Australian economy is well positioned to recover first from the COVID-19 recession. Already 19,100 jobs were added or reinstated in July with skilled job vacancies up by 11.3 per cent.
• NSW is managing to keep Sydney’s virus flare ups at bay for now. NSW – which has lost 134,300 jobs since February – added 56,800 jobs in July. Jobs are returning in Parramatta, Ryde and the nearby NSW Central Coast. But unemployment is high in NSW tourism and retiree ‘lifestyle’ regions, such as Coffs Harbour-Grafton (11.6 per cent) and Newcastle & Lake Macquarie (9.7 per cent). Policymakers certainly have a delicate balancing act addressing disparities in joblessness nationally.
• China’s industrial recovery continues with the country on track to rebound quickest of all major economies from the virus economic contraction. While stimulus is feeding through to construction, manufacturing and infrastructure activity, policymakers remain wary given high debt levels. China’s Loan Prime Rates have been stable – keeping mortgage and corporate lending rates anchored at low levels – but the State Council has said that it will cut rates again to support still-weak domestic demand, if necessary.
Published by Ryan Felsman, Senior Economist, CommSec