<p>A landmark former orphanage site in Surrey Hills could be transformed into a new residential community under plans lodged by <a href="https://www.apartments.com.au/developers/antipodean-land-developments">Antipodean Land Developments</a> that would deliver 76 apartments and townhouses while restoring some of the suburb's most significant heritage buildings.</p>

<p>The burgeoninng Melbourne-based developer has submitted plans for the 9,158 sqm site at 1 Kent Road and 24 Durham Road, home to the former St Joseph's Home for Destitute Children, a historic institutional complex dating back to the late 19th century. The proposal seeks to adaptively reuse several heritage buildings while introducing two new four-storey residential buildings set within extensive landscaped grounds.</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> and Kerstin Thompson Architects, the project has been conceived as a contemporary residential village embedded within a restored heritage precinct. The development team describes the design approach as "The Village in the Garden," with new buildings positioned among mature landscaping by OCULUS and significant heritage structures.</p>

<p><img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="44ec8c1b-c0b6-44ae-859e-5811b3e6a023" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%281%29.png?VersionId=p.p1_KFh4iQoV4nisdnPfQBAsWNi7m79" /></p>

<p>The proposal would deliver 76 dwellings comprising a mix of apartments and duplex-style residences, significantly increasing housing supply on one of the largest privately held residential landholdings in Surrey Hills. The development includes 127 car spaces, 24 bicycle spaces and more than 1,000 sqm of communal amenity, with the existing chapel building earmarked for conversion into resident facilities.</p>

<p>According to the planning submission, the project centres on the restoration and adaptive reuse of the site's most significant heritage assets, including the original c.1889 St Joseph's building, the chapel designed by architect Augustus Andrew Fritsch, and the historic brick perimeter walls and entry gates. The proposal also incorporates the retention of other contributory buildings including the former infirmary and school building.</p>

<p>Tract Consultants, in the planning report accompanying the application, said the scheme had been shaped through extensive heritage analysis and design development.</p>

<p>"The shared vision for the Site by the project team has culminated in a scheme which successfully breathes life back into a historic site while delivering upon the objectives of Victoria's Housing Statement in a carefully curated and contextually responsive manner."</p>

<p><img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="7263b7d8-95ea-400f-9531-6ca7d22c3c33" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%282%29.png?VersionId=4cR1tiWOsDpgxEOwZi5vVFcyvvOsYkIE" /></p>

<p>The proposal is being assessed under Victoria's Significant Residential Development with Affordable Housing pathway. As part of the application, three per cent of the project's residential development cost would be contributed to the Social Housing Growth Fund. The development would also provide a diverse mix of one, two and three-bedroom residences targeting a broader range of buyers than typically found in Surrey Hills' detached housing market.</p>

<p>Sustainability initiatives include an anticipated 66 per cent BESS score, natural cross-ventilation to 80 per cent of apartments, 28 per cent deep soil landscaping and a canopy cover outcome exceeding local planning requirements. The proposal also sets aside more than 1,083 sqm for communal indoor and outdoor resident amenity spaces.</p>

<p><img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="33fad46f-fe26-4d0a-acfd-6b776e1c6a3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design.png?VersionId=D9F6WVSyYCtGvSUmith35LRp6R7PQkw_" /></p>

<p>Planning documents describe the property as one of the largest underutilised residential sites in Surrey Hills, arguing it presents a rare opportunity to introduce "missing middle" housing in an established inner-eastern suburb while preserving and revitalising a significant heritage precinct.</p>

<p>Antipodean Land Developments has built a reputation for design-focused residential projects across Melbourne, particularly in the medium-density sector. Previous developments include Neighbourhood in Brunswick East, delivered with Breathe Architecture, and Balfe Park Lane, designed by Kerstin Thompson Architects.</p>

<p>They've been very active in site acquisition as they build out their future development pipeline. They recently launched Thornubury House, 45 apartments above a mix of commercial, retail, and food and beverage tenancies, and have plans for a boutique project in Fitzroy and another <a href="https://www.apartments.com.au/news/vic/antipodean-plan-apartments-for-deepdenes-missing-middle-on-whitehorse-road">"missing middle" project</a> on Deepdene's Whitehorse Road.</p>


Joel Robinson

First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills

<p>Developer <a href="https://www.apartments.com.au/developers/auyin-property-development">Auyin</a> is the latest to turn to the Victorian Government's Development Facilitation Program in an effort to secure approval for its long-planned, mixed-use project in Elsternwick.</p>

<p>In 2018, Auyin lodged plans with Glen Eira City Council for a 14-storey building, however Council approved a reduced eight-storey scheme. A subsequent VCAT appeal in 2019 upheld the eight-storey height limit.</p>

<p>The project was later amended to nine storeys, but Auyin is now seeking to revive something closer to its original vision. The developer argues that the planning context has evolved significantly over the past decade, particularly within the Elsternwick Activity Centre, where higher-density development has increasingly been encouraged along Glen Huntly Road.</p>

<p>The proposal would transform the 1,239 sqm site at <a href="https://www.apartments.com.au/new-apartments/7-12-horne-street-elsternwick-vic-3185">7-15 Horne Street</a>, opposite Elsternwick Railway Station, into a 13-storey residential and retail development designed by CBG Architects, with 40 apartments</p>

<p>The site currently comprises three commercial properties.</p>

<p><img alt="First look: 13-storey mixed-use tower planned for Elsternwick activity centre" data-entity-type="file" data-entity-uuid="5f465dd4-509b-4082-a669-0253b313914b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/elsternwick%20podium.png?VersionId=72frWi0SmQ5AVJ3ARRhX5ILUYObhTm7x" /></p>

<p>The proposed apartment mix comprises 25 two-bedroom and 15 three-bedroom residences above 200 sqm of retail space at ground level. Residents would have access to a 90 sqm wellness facility, a 351 sqm communal indoor and outdoor terrace on the third level, and extensive landscaped areas throughout the development. A publicly accessible 135 sqm plaza would be created on the north-east corner of the site, providing seating, landscaping, and a new gathering space adjoining Horne Street.</p>

<p>The design adopts a four-storey podium that references the finer-grain character of the surrounding streetscape, with the upper tower recessed behind generous setbacks on all boundaries.</p>

<p><img alt="First look: 13-storey mixed-use tower planned for Elsternwick activity centre" data-entity-type="file" data-entity-uuid="e637e763-2abc-4c34-a0aa-5c7ad36fae18" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/elsternwick%20open.png?VersionId=J1AoOpZgTyaF.KeeFSX6lMjEScX8KKRi" /></p>

<p>A key element of the proposal is the reconfiguration and widening of the surrounding laneways. Vehicle access would be retained from Lois Lane, with upgraded pedestrian connections linking Ross Street and Horne Street. The development would provide 58 residential car spaces, two retail car spaces, and 52 bicycle spaces across two basement levels and ground-floor facilities.</p>

<p>Architecturally, the building draws inspiration from the established character of Elsternwick Village. The façade combines dark charcoal brickwork, textured concrete, bronze-toned metal detailing, and extensive planting integrated into podium and tower levels. The design also incorporates a chamfered corner treatment and publicly accessible plaza intended to strengthen pedestrian activity around the station precinct.</p>

<p>Elsternwick's last new development completion was&nbsp;EVA Elsternwick by Pitard late last year. <a href="https://www.apartments.com.au/developers/milieu-property">Milieu</a> is working away on its nature-led neighbourhood, <a href="https://www.apartments.com.au/new-apartments/elsternwick-gardens-by-milieu-8-gordon-street-elsternwick-vic-3185">Elsternwick Gardens</a>, on Gordon Street, with its first stage expected to complete next year.</p>


First look: Auyin seeks mixed-use apartment project in growing Elsternwick Activity Centre

<p><a href="https://www.apartments.com.au/new-apartments/otium-parkdale-123-125-como-parade-east-parkdale-vic-3195">Otium Parkdale</a>, the 13-residence boutique development by&nbsp;<a href="https://www.apartments.com.au/developers/huxtable-property">Huxtable Property</a>, has entered its final stages of delivery, with completion expected within the coming month and more than half of the residences sold.</p>

<p>The Como Parade East project is nearing the finish line at a time when opportunities to purchase new apartments in <a href="https://www.apartments.com.au/developments/parkdale-vic-3195">Parkdale</a> remain exceptionally limited. Fewer than 10 per cent of dwellings in the bayside suburb are apartments, making developments like Otium a relatively rare addition to a market traditionally dominated by detached housing.</p>

<p>[smartcode_project:default project_id=134974 project_image_fid=5427]</p>

<p>The three-level development comprises 13 residences, including ten two-bedroom apartments and three larger three-bedroom homes, all positioned above a secure basement car park.</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/almeida-architects">Almeida Architects</a> with a strong connection to its coastal surroundings, Otium combines red brick, exposed concrete and dark metal detailing with integrated landscaping and greenery. Expansive glazing, generous balconies and terraces have been incorporated throughout the design to maximise natural light and reinforce indoor-outdoor living.</p>

<p>Inside, the residences feature engineered European oak flooring, natural and reconstituted stone benchtops, Bosch kitchen appliances, ducted heating and cooling, lift access and secure entry systems. The larger three-bedroom residences on the upper level have been designed with house-like proportions, while the two-bedroom apartments prioritise functionality, flexibility and low-maintenance living.</p>

<p>[smartcode_project:default project_id=134974 project_image_fid=5421]</p>

<p>The project is now in its final stages, with <a href="https://www.apartments.com.au/builders/labco">Labco</a> completing the remaining landscaping and external finishing works following the completion of the residences' interiors.</p>

<p>Otium's location within the heart of Parkdale continues to underpin its appeal. Residents will be just steps from local cafés, restaurants, shops and the newly elevated Parkdale Station, while the beach is less than a kilometre away.</p>

<p>With the project tracking ahead of schedule, buyers can currently secure a residence with a five per cent deposit and benefit from settlement terms of up to eight months. The advanced stage of construction also provides buyers with the opportunity to walk through the near-complete residences and experience the quality and finishes firsthand ahead of completion.</p>

<p>[smartcode_project_cta:default project_id=134974]</p>


Otium Parkdale enters final month before completion as rare apartment opportunity nears sellout

<p>A new boutique apartment development is entering the market in <a href="https://www.apartments.com.au/developments/chermside-qld-4032">Chermside</a>, with Brisbane-based developer <a href="https://www.apartments.com.au/developers/ausdev">Ausdev</a> bringing 33 residences to a well-connected pocket of Brisbane's north.</p>

<p><a href="https://www.apartments.com.au/new-apartments/parkdrive-apartments-chermside-25-sammells-drive-chermside-qld-4032">Parkdrive Apartments</a>, at 25 Sammells Drive, will comprise a mix of one- and two-bedroom residences positioned within walking distance of Westfield Chermside, The Prince Charles Hospital, and Bradbury Park.</p>

<p>Established in 1989, Ausdev has a long-standing presence across both development and construction, with Parkdrive Apartments representing its latest residential project in Brisbane's northern suburbs.</p>

<p>[smartcode_project:default project_id=152125 project_image_fid=363778]</p>

<p>The development has been designed around open-plan living and natural light, with residences featuring stone benchtops, timber cabinetry, BOSCH appliances, and private balconies that extend the living areas outdoors.</p>

<p>Kitchens are positioned as the centrepiece of the homes, incorporating natural material palettes and integrated appliances, while bathrooms have been designed with a focus on functionality and understated finishes.</p>

<p>Residents will have access to a communal barbecue and entertaining area on Level 3, providing shared outdoor space within the development. Secure parking and lift access are also incorporated into the building.</p>

<p>The project will deliver a limited collection of 33 apartments, with one-bedroom residences priced from $749,000.</p>

<p>[smartcode_project:default project_id=152125 project_image_fid=363782]</p>

<p>Beyond the building itself, the location places residents within easy reach of several of Chermside's key amenities. Bradbury Park is around 350 metres away, while Westfield Chermside is approximately 1.3 kilometres from the site. The Prince Charles Hospital is located within 750 metres, and the Chermside Bus Interchange is around 1.5 kilometres away, providing connections across Brisbane.</p>

<p>Parkdrive Apartments adds to the growing residential pipeline in Chermside, a suburb that continues to evolve as a major retail, healthcare, and transport hub for Brisbane's north.</p>

<p>[smartcode_project_cta:default project_id=152125]</p>


Ausdev introduces boutique Parkdrive Apartments to Chermside's growing centre

<p><a href="https://www.apartments.com.au/developers/skymark-group">Skymark</a>'s boutique Cronulla development Solis has secured a 10-year Latent Defects Insurance policy through Resilience Insurance, providing buyers of the 16-residence building on Ewos Parade with structural and waterproofing protection that extends a decade beyond the building's completion.</p>

<p>Currently under construction and due for completion in late 2027, <a href="https://www.apartments.com.au/new-apartments/solis-cronulla-8-ewos-parade-cronulla-nsw-2230">Solis</a> is one of a small number of new developments in the Sutherland Shire to carry Resilience LDI coverage, a distinction that carries increasing weight as buyer confidence in the off-the-plan sector continues to be shaped by how developers stand behind their product.</p>

<p>Latent Defects Insurance, which entered the Australian market in 2022 when Resilience Insurance was approved to offer the cover, protects buyers against major structural or waterproofing defects for ten years post-completion. Unlike traditional statutory warranties, it operates as a first-resort policy, if a covered defect arises, the insurer responds directly, without the buyer needing to pursue the builder or developer through a lengthy claims process.</p>

<p>Resilience Insurance CEO Corey Nugent has noted that the product addresses something fundamental to the new apartment market.</p>

<p>"The overarching feedback from prospective buyers in the new development space is that they want more confidence and assurances around the quality of the build," Nugent says.</p>

<p>"Resilience Insurance Latent Defects Insurance not only gives them complete peace of mind for 10 years, but it shows the developer they are buying from is standing by their product."</p>

<p>[smartcode_project:default project_id=150499 project_image_fid=370898]</p>

<p>For Solis, the Resilience LDI policy adds a meaningful layer of accountability to an already considered project. The development comprises nine two-bedroom and seven three-bedroom residences, including one dual-level three-bedroom apartment, across a five-storey building on Ewos Parade, positioned between Shelly Beach and South Cronulla.</p>

<p>Garden apartments connect directly to private landscaped courtyards, while upper-level homes capture beach views to the east from level four and above.&nbsp;</p>

<p>All 16 residences include at least one balcony or courtyard, and select apartments on the upper floors feature bar areas and secondary flexible living spaces.</p>

<p>Hiba Sander, Managing Director of Skymark, says Solis offers a rare balance, nestled between the quiet beauty of secluded beaches and the lively charm of South Cronulla's esplanade.</p>

<p>"It's a place to choose your pace and live gracefully, seaside'," Sander says.</p>

<p>[smartcode_project:default project_id=150499 project_image_fid=370900]</p>

<p>The architecture, designed by <a href="https://www.apartments.com.au/architects/ida-design-group">IDA Design Group</a>'s Michael Trinh, draws from the natural erosion patterns of <a href="https://www.apartments.com.au/developments/cronulla-nsw-2230">Cronulla</a>'s sandstone headlands, translating the organic forms of the coastline into soft curves, pavilion-style massing, and a material palette chosen for longevity in a salt-tinged environment.&nbsp;</p>

<p>Textured natural stone, soft renders, and timber-look battens reference the tones of the surrounding cliffs, while the building has been oriented to maximise natural light and passive ventilation, with primary living spaces facing north and east to capture morning sun and sea breezes.</p>

<p>"At Solis, our aim was to create architecture that feels quietly confident, grounded in natural materials like stone and timber, and elevated by light and landscape," Trinh says.&nbsp;</p>

<p>"The buildings are designed to sit gently within their coastal surrounds, with expansive glazing and abundant greenery creating a seamless dialogue between inside and out."</p>

<p>[smartcode_project:default project_id=150499 project_image_fid=370897]</p>

<p>Interiors by <a href="https://www.apartments.com.au/architects/hot-black">Hot Black</a> carry the same material language through to every room. Kitchens feature integrated Gaggenau appliances, sculpted stone benchtops, and Lo &amp; Co joinery, while bathrooms feature natural stone, timber, and brushed metal finishes.&nbsp;</p>

<p>Hot Black Founder and Design Director Sophie Safrin describes the intent as one of considered restraint: "At Solis, every detail has been thoughtfully considered to create a timeless coastal retreat, calm, refined, and effortlessly liveable. From natural finishes to seamless indoor-outdoor flow, Solis offers a quiet elegance that's deeply connected to its surroundings.</p>

<p>The landscape, designed by Julian Brady of <a href="https://www.apartments.com.au/landscape-architect/sitedesignstudios">Site Design Studios</a>, treats green space as an integral part of the resident experience rather than an afterthought.&nbsp;</p>

<p>"Gentle curves and layered native plantings mirror the ebb and flow of the ocean," Julian Brady says, "creating a serene connection between architecture and place."&nbsp;</p>

<p>Coco Republic has provided bespoke furniture packages tailored to the project's coastal palette.</p>

<p>[smartcode_project:default project_id=150499 project_image_fid=370899]</p>

<p>Skymark has an established track record in the Sutherland Shire, with a portfolio spanning Cronulla, Woolooware and Burraneer that includes Isla, Sylva, Bask, Shells, Sula and Mist. Securing LDI on Solis reflects a broader shift in how the developer is positioning its buildings to buyers, at a time when Resilience Insurance expects the policy to become mandatory in New South Wales by 2028.</p>

<p>Sales at Solis are launching soon through Ray White Projects, with an official event scheduled for 11 June. Enquire for more information.</p>

<p>[smartcode_project_cta:default project_id=150499]</p>


Skymark takes out 10-year Resilience Insurance LDI at Solis Cronulla

Employment

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<p>Sydney's higher house prices over the past four years has seen many households take on larger mortgages while remaining in their own home.</p>
<p>And it has been high-debt households that have increased their debt by more than low-debt households. </p>
<p>Research by the Australian Housing and Urban Research Institute (AHURI) has suggested the responsive of households to house price growth has been greatest among households with already higher levels of indebtedness.</p>
<p>"These households are the most vulnerable to income shocks, such as unemployment," the report warned.</p>
<p>They found that a $1,000 increase in house values prompted a $240 increase in household debt for home owners. A one percent increase in local house price growth was accompanied by a 0.3 percent decrease on household non-mortgage debt. </p>
<p>They warned the take-up of further mortgage debt exposed them to the risk of significant loss if house prices fall or if interest rates rise.</p>
<p>"This, in turn, may pose a systemic risk for the macroeconomy.</p>
<p>"An economic shock, emanating in either financial, labour or housing markets, may lead to widespread defaults that would cause the shock to spread across markets and threaten the performance of the economy," it said.</p>
<p>Their report noted a general belief in Australia that debt is held by those most able to service it, namely, higher-income and higher-wealth households. </p>
<p>Ofcourse the Organisation for Economic Cooperation and Development has long observed that Australia’s household debt ratios (debt divided by disposable income) are high by international standards.</p>
<p>In the mid-1990s, household debt was around 50 per cent of household disposable income.</p>
<p>This ratio rose to over 150 percent of income by 2007, with housing debt alone accounting for almost 90 percent of this, and has since remained constant.</p>
<p>In Australia we have not seen households reducing their debt burden as witnessed in other countries more severely affected by the GFC.</p>
<p>Instead when these households experienced increases in the value of their housing wealth, they have been quite likely to refinance from their relatively more expensive unsecured non-mortgage debt, by moving debt from credit card to home loan.</p>
<p>The debt escalation is possibly already adding to housing stress and resulting in less money being available for discretionary spending.</p>
<p>We know around 30 percent of home owners have no debt, but evidence on the relationship between house prices and debt is scarce.</p>
<p>There are always links between household debt and work life-cycle. </p>
<p>Any price movements in housing markets has the potential to either promote or dampen labour supply, according to the AHURI research paper, House prices, household debt and labour supply in Australia authored by Kadir Atalay, Garry Barrett and Rebecca Edwards. </p>
<p>Higher housing debt-to-income levels are associated with longer working hours especially for middle aged and older men along with for younger and older women.</p>
<p>But throw in the positive wealth effect of good house price growth and it leads to a reduction in labour supply for older women via early retirement and for young partnered men and women who move to carer activities.</p>
<p>Households typically smooth any fluctuations in current income by accumulating wealth. They achieve this by saving when income is relatively high and by drawing on that wealth when income is relatively low. Anticipated changes in wealth are built into consumption plans, but unemployment shocks aren't.</p>
<p>It was interesting to see more borrowers are falling behind on repayments, according to credit ratings agency Fitch this week.</p>
<p>Despite low interest rates, the appreciating housing market and falling unemployment, Fitch believes the worsening arrears may be due to the emerging trend of higher underemployment.</p>
<p><em>This article was first published in the Saturday Daily Telegraph.</em></p>
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jchancellor-FAypfDUnLy

Underemployment could be weak link in growing household debt

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<p><span>GUEST OBSERVER</span></p>
<p><span>Australian employment numbers surprised to the downside in August, with a fall of -4k jobs (market had 15k jobs), but the unemployment rate was better than expected, falling to a new cyclical low of 5.6 percent (market had 5.7 percent). </span></p>
<p><span>The factor that reconciles these divergent trends is a noticeable decline in the participation rate, from 64.9 percent to 64.7 percent. </span></p>
<p><span>This survey has been subject to measurement issues for some time now and the August numbers have often been problematic. We are therefore cautious about reading too much into the numbers. The other timely indicators of the labour market are consistent with ongoing jobs growth of about 2 percent y-o-y, which is enough to see the unemployment rate gradually edge lower. We see the RBA on hold in coming quarters. </span></p>
<p><span>Facts </span></p>
<p><span>- Employment fell by 4k in August (market expected +15k, HSBC expected +20k). Over the past six months, jobs growth has averaged +13k a month. Annual employment growth stands at 1.5 percent, down from 1.9 percent previously. </span></p>
<p><span>- Full-time employment rose by 11k in August, but is just 0.4 percent higher than a year ago. Part-time employment fell by 15k but is up 4.1 percent from a year ago. </span></p>
<p><span>- The participation rate fell from 64.9 percent to 64.7 percent, the lowest since May 2015. </span></p>
<p><span>- The unemployment rate was 5.6 percent, down from 5.7 percent in July. That is the lowest unemployment rate recorded since September 2013. </span></p>
<p><span>- The employment-to-population ratio was 61.1 percent, down 0.1 percent from July. </span></p>
<p><span>- Total hours worked fell by 0.2 percent m-o-m. Trend annual growth in hours worked stands at 0.5 percent y- o-y, having hit 2.8 percent y-o-y in November 2015. </span></p>
<p><span>Implications </span></p>
<p><span>The unemployment rate fell to the lowest level in around three years in August, although not for positive reasons. Total employment was actually down slightly, partly due to sample rotation. But this was more than offset by a lower participation rate, which meant that the overall labour force shrank. A drop of 0.2ppts in the participation rate may not sound like much, but if participation had held steady the unemployment rate would actually have climbed to 5.9%, by our calculations. </span></p>
<p><span>Overall then, the monthly result is a weak one. But as always, we treat a single month’s labour market data with a great degree of caution, especially in light of the disruptions seen in the seasonal pattern in recent years (particularly in the August and September months). It is trends that emerge over several months that matter, and for now there is little evidence to suggest a material slowdown in employment growth from a pace of around 2 percent y-o-y (equivalent to around 20k jobs per month). Other indicators, such as job advertisements and business conditions, also point to continued growth at around that rate. </span></p>
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<p><span>Ordinarily, annual employment growth of 2 percent or just below would be enough to offset growth in the labour force and keep the unemployment rate broadly steady. Over the past year, we have seen slightly lower participation – unusual given solid employment growth – and if that continues unemployment may continue to ease gradually lower. We also see potential for the labour market to strengthen from around mid-2017 as the drag from mining investment diminishes and domestically-driven growth picks up. </span></p>
<p><a href="/images/2016/09/16/Screen%20Shot%202016-09-16%20at%208.10.49%20AM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span> <img src="/images/2016/09/16/Screen%20Shot%202016-09-16%20at%208.10.49%20AM.png" alt=""></span></p>
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<p><span><em><a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team" target="_blank">PAUL BLOXHAM</a> IS CHIEF ECONOMIST (AUSTRALIA AND NEW ZEALAND) FOR HSBC. </em> </span></p>
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Unemployment rate down, but participation also falls: HSBC's Paul Bloxham

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<p><img src="https://counter.theconversation.edu.au/content/65248/count.gif" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>What is the one thing that makes young people everywhere the most anxious? According to the Global Youth Wellbeing Index, it’s a lack of future economic opportunities.</p>
<p>Data from both the OECD and the Youth Wellbeing Index show Australian youth have had it better than just about any other country’s young workforce, but their prospects are also not so rosy.</p>
<p>It’s clear that the millennial cohort has drawn a short straw compared to earlier generations. A large majority (85 percent) of the world’s youth are experiencing low levels of wellbeing, the index notes.</p>
<p>But they aren’t getting much sympathy: a virulent anti-millennial sentiment has led to their derision as “generation jobless”.</p>
<p>It’s also worth considering how the youth of Australia have fared and expect to fare – because while the verdict has historically been excellent, there are disparities masked by the glossy big picture.</p>
<p>What about Australian young people?</p>
<p>As ample survey data now shows, Australian youth are fretting about their prospects, with lower income growth, overqualification, employment instability and crowding out from many key domains such as housing; all these factors together portend a more stressed generation.</p>
<p>Perhaps no statistic captures this better than the fact that one-quarter of young Australians say they are unhappy with their lives.</p>
<p>Since the global financial crisis of 2008, the number of youth that are “neither in employment, education or training” (often called “NEET”) has actually risen by 1.4 percent to 11.8 percent. This equates to 580,000 young people.</p>
<p>Inequality in education tends to be a driver of inequality in employment. Young Australians who have only a Year 10 Certificate are more than three times as likely to be unemployed as those with tertiary education.</p>
<p>There is also a clear disparity by gender. Young women are 50 percent more likely to be stuck in a NEET situation than men. This is well above the OECD average of 36 percent for gender disparity.</p>
<p>The problem is particularly prevalent among young Australian women caring for infants. This is why a lack of access to affordable child care and flexible working arrangements are two significant barriers that must be addressed.</p>
<p>There is also a racial aspect to youth employment. Indigenous youth NEET rates are more than three times higher than those of non-indigenous Australians. Part of the challenge in this regard stems from the weak labour markets in remote and very remote regions.</p>
<p>These disparities are often masked when Australia’s impressive overall record is compared with other countries. However, as the Parliamentary Budget Office of Canada has calculated, the economic situation for youth can worsen dramatically in a short time. It did for Canada’s proportion of underemployed youth, which swelled from 35 percent to 40 percent in less than five years. So the overall record for Australia could change soon too.</p>
<p>Sadly, in terms of the fear of a bleak economic future, young Australians are not that different from their peers abroad.</p>
<p>A universal fear</p>
<p>Around the world, nearly half the youth are unemployed or underemployed, while more than 120 million youth are still illiterate. So it is difficult to overstate the universality of this problem.</p>
<p>Is this because youth employment has received the least focus? Unemployment has historically taken a back seat to other core priorities towards the young.</p>
<p>The Millennium Development Goals (MDGs), for example, include the eradication of hunger, child mortality, illiteracy and disease – but there is no goal for unemployment or underemployment. It may be time to add another notch to these priorities, with a focus on developing strategies for engaging and employing youth.</p>
<p>The benefits if we achieved this goal are far from superficial. It is well documented that when youth are gainfully employed they are less likely to rely on social programs, less inclined to criminality, better engaged in civic life and better poised in their sense of personal wellbeing.</p>
<p><em>Usman W. Chohan is doctoral candidate, Policy Reform and Economics, UNSW Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/usman-w-chohan-182272" target="_blank">here</a>.</em></p>
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Young people worldwide fear a lack of economic opportunities – it’s easy to see why

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<p class="x_csbulletlv10"> GUEST OBSERVER</p>
<p class="x_csbulletlv10"><a name="x_OLE_LINK5" target="_blank" href=""></a>Employment rose by 26,200 in July after rising by 10,800 people in June (previously reported as a rise in jobs of 7,900).</p>
<p class="x_csbulletlv10">Full-time jobs fell by 45,400 while part-time jobs rose by 71,600. Economists had tipped a 10,000 increase in jobs.</p>
<p class="x_csbulletlv10">Hours worked rose by 0.2 percent in July. Hours worked are up by 1.1 percent on the year.</p>
<p class="x_csbulletlv10">Jobless rate: The unemployment rate fell from 5.8 percent to 5.7 percent in July. To two decimal points the jobless rate fell from 5.77 percent to 5.72 percent (lowest rate recorded in almost three years). The trend unemployment rate was steady at 5.7 percent (hasn’t been lower in three years). The participation rate was steady at 64.9 percent.</p>
<p class="x_csbulletlv10">Unemployment across states in July: NSW 5.2 percent (June 5.3 percent); Victoria 5.9 percent (5.7 percent); Queensland 6.1 percent (6.4 percent); South Australia 6.4 percent (7.0 percent); Western Australia 6.3 percent (5.7 percent); Tasmania 6.2 percent (6.6 percent). In trend terms unemployment in the Northern Territory fell from 3.7 percent to 3.5 percent; ACT unemployment fell from 3.7 percent to 3.6 percent.</p>
<p class="x_CSbulletlv1"><em>A raft of companies is affected by the employment data but especially those dependent on consumer spending. Amongst stocks affected are Fairfax, West Australian Newspapers, Seek Limited, McMillan Shakespeare and Skilled Group.</em></p>
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<p><span>What does it all mean?</span></p>
<p class="x_Bullets">The headline employment result was certainly encouraging. Over 26,000 new jobs were created in July and the unemployment rate fell to a three-year low of 5.7 per cent. However the breakup of the figures, suggests the labour market has been largely marking time over the last few months, influenced by election uncertainty. Hours worked lifted in July, however it has fallen for six out of the past nine months. </p>
<p class="x_Bullets">Given the month to month volatility it is better to look at the longer term results. And in that regard, employment has totalled almost 72,000 new jobs in the first seven months of 2016, compared with over 150,000 in the same period last year. And the results are markedly more polarising when you compare the growth in full-time jobs. </p>
<p class="x_Bullets">Full-time jobs growth has gone backward by almost 65,000 so far in 2016 compared with jobs growth of almost 90,000 in the same period last year. It is clear that a slowdown in hiring has taken place – a result that has also seemingly shown up in the more sedate growth in the job ads series earlier this year. </p>
<p class="x_Bullets">The softer results across the labour market mirror other indicators across the economy, including retail sales. It’s pretty clear that the sluggish first half of 2016 resulted in employers managing their major cost base (employees) more carefully.</p>
<p class="x_Bullets">Importantly the election would have played a significant part in the pullback in hiring momentum over the first half of the year. And you could easily argue that the employment results are backward looking. Highlighting the economic environment 4-5 months ago.</p>
<p class="x_Bullets">The hope would be that now the election is out of the way consumers and businesses will go back to spending, investing and hiring - particularly given the ultra-low interest rates on offer and significant improvements in the household budget.</p>
<p class="x_Bullets">The Reserve Bank is likely to look through the latest result and wait on timelier forward looking data. Recent Reserve Bank commentary suggests policymakers are relatively optimistic about Australia’s medium-term growth prospects. Over the next few months the Reserve Bank would be looking at the impact of the last couple of rate cuts. Further rate cuts are more dependent on inflation outcomes, and from that regard CommSec expects another interest rate cut in November.</p>
<p><em>Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a></em></p>
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November rate cut still on despite unemployment to a 3-year low: CommSec's Savanth Sebastian

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<div>A strong +1.6 percent increase in job advertisements in June saw year-on-year vacancies rise very strongly by +11 percent to a total of 169,600, according to the Department of Employment.</div>
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<img src="/images/2016/07/21/Job%20Abs2.jpg" alt=""><br><div><em><span style="text-decoration: underline;">Source: Department of Employment</span></em></div>
<br><div>Total vacancies are now at their highest level in four years, which bodes well for jobs growth picking up. </div>
<br><div class="separator"><a href="/images/2016/07/21/Internet%20Job%20Ads.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/07/21/Internet%20Job%20Ads.jpg" alt=""></div>
<div> </div>
<div>Since the peak of the mining boom June 2012, the share of total vacancies located in Western Australia has declined from 15.6 percent to 7.8 percent. </div>
<br><div>On the other hand there has been a huge surge in vacancies in New South Wales over the past three years, up by 37.4 percent in trend terms to a massive 91,400 (a record boom). </div>
<div> </div>
<div>Over the past year the percentage growth in vacancies has also been very strong in Victoria, Queensland, South Australia, Tasmania, and the ACT. </div>
<br><div class="separator"><a href="/images/2016/07/21/Job%20Ads4.jpg" target="_blank">Click to enlarge</a></div>
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<div> </div>
<div>In trend terms all eight occupation groups are strengthening, and over the year job advertisements were up in 33 of the 37 recorded regions. </div>
<div> </div>
<div>The decreases were seen in northern Queensland, Perth, and western Tasmania.</div>
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<div><a href="/images/2016/07/21/Job%20ads5.jpg" target="_blank">Click to enlarge</a></div>
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<div><img src="/images/2016/07/21/Job%20ads5.jpg" alt=""></div>
<div> </div>
<br><div>The index has its weaknesses, particularly since it doesn't differentiate between full time and part time gigs.</div>
<br>Nevertheless, all in all, this looks pretty good for jobs growth in the second half of 2016.</div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Job ads up to a four-year high: Pete Wargent

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<div class="page" title="Page 1">GUEST OBSERVER</div>
<div class="page" title="Page 1"> </div>
<div class="page" title="Page 1">Employment rose by 17,900 in May after rising by just 900 people in April (previously reported as a rise in jobs of 10,800). Full-time jobs were unchanged while part-time jobs rose by 17,900. Economists had tipped a 15,000 increase in jobs.</div>
<div class="page" title="Page 1">
<br>Hours worked rose by 1.7 per cent in May – best gain 16 months. Hours worked are up by 1.4 per cent on the year.</div>
<div class="page" title="Page 1"> </div>
<div class="page" title="Page 1">Jobless rate: The unemployment rate held steady near a 3-year low of 5.7 per cent in May (lowest since September 2013). The trend unemployment rate was steady at a 31-month low of 5.7 per cent. The participation rate was steady at 64.8 per cent.</div>
<div class="page" title="Page 1"> </div>
<div class="page" title="Page 1">Unemployment across states in May: NSW 5.2 per cent (April 5.3 per cent); Victoria 5.8 per cent (5.6 per cent); Queensland 6.4 per cent (6.5 per cent); South Australia 6.9 per cent (6.8 per cent); Western Australia 5.7 per cent (5.6 per cent); Tasmania 6.5 per cent (6.3 per cent). In trend terms unemployment in the Northern Territory fell from 4.2 per cent to 4.1 per cent; ACT unemployment fell from 3.9 per cent to 3.8 per cent.</div>
<div class="page" title="Page 1">
<br>Domestic air traffic: In the year to April, 58.1 million passengers were carried on domestic air routes, up 1.4 per cent over the year and the strongest growth in 25 months.  A raft of companies is affected by the employment data but especially those dependent on consumer spending. Amongst stocks affected are Fairfax, West Australian Newspapers, Seek Limited, McMillan Shakespeare and Skilled Group.  </div>
<div class="page" title="Page 1"> </div>
<div class="page" title="Page 1">What does it all mean?</div>
<div class="page" title="Page 1"> </div>
<div class="page" title="Page 1">There is no pleasing some people. The economy is growing at a 3.1 per cent annual pace – best for 31⁄2 years – and people don’t believe it. Similarly, the jobless rate remains at a near 3-year low of 5.7 per cent and people don’t believe it. Still, trend data shows that the unemployment rate has been consistently improving over the past year and stands at 5.7 per cent, in line with the  seasonally adjusted result. So it is no fluke – economic growth has picked up, and the jobless rate has come down.</div>
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<div class="page" title="Page 1">While job creation is concentrated in part-time positions, this is to be expected with an election underway. Businesses want to see the election outcome before they commit to taking on more workers. And encouragingly the number of hours worked posted the strongest gain in 16 months suggesting that the work is there. Businesses are just meeting the extra demand by hiring temps and getting existing employees to work more hours.</div>
<div class="page" title="Page 1"> </div>
<div class="page" title="Page 1">So no surprises in the jobs data. And that suggests the Reserve Bank will stay on the interest rate sidelines until August at which point it will have digested the latest inflation data.</div>
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<div class="column">Arguably the NSW, ACT and Northern Territory job markets are at or near “full employment”. The $64 question is at what point wage pressures emerge, potentially injecting some inflation into the economy. If wage pressures emerge, they are more likely to emerge in construction markets.</div>
<div class="column"> </div>
<div class="column">Employment by industry jobs data is released next Thursday.<br><p>The lift in the number of passengers flying domestic air routes – especially the key Sydney-Melbourne route – adds further weight to the argument that the economy is doing well. The lift in the growth rate of passengers on the Sydney-Melbourne route (third busiest in the world) lines up with the improvement in the job market over the past year.</p>
<p>What do the figures show?</p>
<p>Labour force:</p>
<p>Employment rose by 17,900 in May after rising by just 900 people in April (previously reported as a rise in jobs of 10,800). Full-time jobs were unchanged while part-time jobs rose by 17,900. Economists had tipped a 15,000 increase in jobs.</p>
Hours worked rose by 1.7 per cent in May – best gain 16 months. Hours worked are up by 1.4 per cent on the year.</div>
<div class="column">
<br>The unemployment rate held steady near a 3-year low of 5.7 per cent in May (lowest since September 2013). The trend unemployment rate was steady at a 31-month low of 5.7 per cent.</div>
<div class="column"> </div>
<div class="column">In trend terms the jobless rate for 15-24 year persons was steady at 12.2 per cent.</div>
<div class="column"> </div>
<div class="column">The underemployment rate was steady at 8.4 per cent in May. The underutilisation rate rose from 14.1 percent to 14.2 per cent. </div>
<div class="column"> </div>
<div class="column">The participation rate was steady at 64.8 per cent.</div>
<div class="column"> </div>
<div class="column">A total of 224,700 jobs were added over the year to May. The annual growth rate eased from 2.0 per cent to 1.9 per cent. In trend terms, employment has risen for 30 consecutive months although the jobs growth of 3,700 in May was the weakest in 20 months.</div>
<div class="column">
<br>The working age population rose by 21,700 in May. The working age population rose by 287,900 over the past year – the strongest gain in two years. The working age population is up 1.5 per cent over the past year – strongest growth in 17 months.</div>
<div class="column"> </div>
<div class="column">Unemployment across states in May: NSW 5.2 per cent (April 5.3 per cent); Victoria 5.8 per cent (5.6 per cent); Queensland 6.4 per cent (6.5 per cent); South Australia 6.9 per cent (6.8 per cent); Western Australia 5.7 per cent (5.6 per cent); Tasmania 6.5 per cent (6.3 per cent). In trend terms unemployment in the Northern Territory fell from 4.2 per cent to 4.1 per cent; ACT unemployment fell from 3.9 per cent to 3.8 per cent.<br><p>Jobs across states and territories in May: NSW +5,200; Victoria +1,100; Queensland -4,200; South Australia - 3,700; Western Australia +2.500; Tasmania -200. Trend terms: Northern Territory +300; ACT -300</p>
<p>Sydney-Melbourne air traffic:</p>
<p>The Sydney-Melbourne route is the third busiest air route in the world. The Sydney-Melbourne route is also a key measure of business activity. In the year to April 2016, the number of flights between Sydney and Melbourne eased from a record high of 60,155 (February 2016) to 59,926.</p>
<p>The annual growth rate of the number of Sydney- Melbourne flights eased further from the 33-month high of 7.3 per cent in December to 3.9 per cent in April, just below the decade average growth of 4.2 per cent.</p>
<p>Late last year the increase in the number of flights between Sydney and Melbourne led to an easing in the moving annual load factor to 81.15 per cent in October – a 28-month low. But the average load factor has since lifted in the following six months to an 11-month high of 81.9 per cent in April in line with the slower growth in the number of flights and a continued lift in passenger numbers.</p>
<p>In April, the number of passengers on the Sydney- Melbourne route was up by 5.2 per cent on a year ago to 724,216. In the year to April a record 8.74 million passengers were carried between Sydney and Melbourne. Smoothed annual growth in passenger numbers rose from 3.6 per cent to 3.8 per cent.</p>
<p>All domestic air routes</p>
<p>Across all domestic air routes (not just Sydney-Melbourne) the rolling average load factor (proportion of seats occupied by passengers) held steady at a 29-month high of 76.7 per cent in April.</p>
<p>In the year to April, 58.1 million passengers were carried on domestic air routes, up 1.4 per cent over the year and the strongest growth in 25 months.</p>
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</div>
<div class="page" title="Page 3">
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<div class="column">Why is the data important?</div>
<div class="column"> </div>
<div class="column">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.</div>
<div class="column"> </div>
<div class="column">If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.</div>
<div class="column"> </div>
<div class="column">The Bureau of Infrastructure, Transport and Regional Economics (BITRE) releases regular aviation data. The BITRE releases the Australian Domestic Airline Activity publication each month as well as the Domestic Air Fares publication. The data provides insights on airline activity as well as trends in the broader Australian economy. If more people are flying, then it suggests businesses are more active and/or consumers are more confident.</div>
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<div class="column"><a href="/images/2016/06/17/Screen%20Shot%202016-06-17%20at%209.20.12%20AM.png" target="_blank">Click to enlarge</a></div>
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<div class="column">What are the implications?</div>
<div class="column"> </div>
<div class="column">While the modest lift in job numbers adds to spending power, probably more important is job security. Those with jobs will be heartened at the low jobless rate, giving them confidence to spend.</div>
<div class="column">
<br>The lift in domestic airline passengers is encouraging for the airlines as well as related services.</div>
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<br><em>Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</em><br><img src="file:///page3image19560" alt="page3image19560" width="107.820000" height="1.080000">
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Jobless rate holds near 3-year low: CommSec's Craig James

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<p><span>GUEST OBSERVER</span></p>
<p><span>From the outset it should be stated that the labour market is in pretty good shape. </span></p>
<p><span>The unemployment rate remains at a 2½-year low and jobs are still being created. However it is pretty clear that there is a slowdown in hiring taking place. And the consolidation in employment is consistent with the softer conditions across the economy over the past couple of months.</span></p>
<p><span>Not only is has there been a fall in full time jobs over the past two months, but weakness in </span><span>hours</span><span>worked</span><span> is more telling. </span><span>Hours</span><span>worked</span><span> has fallen for the past three months and in annual terms is now down 0.5 per cent on a year ago. Now that may not sound like much but it is the first annual fall in </span><span>hours</span><span>worked</span><span> in almost three years. Interestingly in trend terms (a more smooth measure), employment may have risen for 29 consecutive months but the jobs growth of just 4,100 in April was the weakest in 19 months.</span></p>
<p><a href="/images/2016/05/18/Screen%20Shot%202016-05-19%20at%203.47.50%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2016/05/18/Screen%20Shot%202016-05-19%20at%203.47.50%20PM.png" alt=""></span></p>
<p><span>After racking up almost 300,000 new jobs in 2015, there was likely to be inevitable period of consolidation. And the volatility in financial markets in the early part of 2016 was unlikely to see businesses commit to significant hiring. The fact that we are still adding jobs is a positive and while we expect employment to strengthen over 2016, it is likely that employers will be more circumspect in hiring given the upcoming Federal Election.</span></p>
<p><span>The Reserve Bank discussed the more mixed labour market signals at their last Board meeting ahead of cutting interest rates. Given the softer set of economic data no doubt policymakers will place more emphasis on labour market data in coming months.</span></p>
<p><span>The Reserve Bank will be hoping for a lift in activity levels particularly once the election gets out of the way. The key will be the inflation data, due on July 27. A super low inflation result would allow the Reserve Bank to contemplate another rate cut – in effect asking the question whether the economy could run at a faster pace without creating asset bubbles. We expect rates to be cut once again in August.</span></p>
<p><span><strong>What do the figures show?</strong></span></p>
<p><span><strong>Labour force:</strong></span></p>
<p>Employment rose by 10,800 in April after rising by 25,700 in March (previously reported as a rise in jobs of 26,100). Full-time jobs fell by 9,300 while part-time jobs rose by 20,200. Economists had tipped a 20,000 increase in jobs.</p>
<p>Hours worked fell by 1.1 per cent in April. Hoursworked are down by 0.5 per cent over the year – marking the first annual decline in hoursworked in almost 3 years.</p>
<p><span>The unemployment rate held steady at a 2½-year low of 5.7 per cent in April (lowest since September 2013). The trend unemployment rate fell from 5.8 per cent to 5.7 per cent – a 31-month low.</span></p>
<p>The participation rate eased from 64.9 per cent to 64.8 per cent.</p>
<p>A total of 244,700 jobs were added over the year to April. The annual growth rate rose from 2.0 per cent to 2.1 per cent. In trend terms, employment has risen for 29 consecutive months although the jobs growth of 4,100 in April was the weakest in 19 months.</p>
<p><span>The working age population rose by 21,700 in April. The working age population rose by 288,900 over the past year. The working age population is up 1.5 per cent over the past year.</span></p>
<p><span>Unemployment across states in April: NSW 5.3 per cent (March 5.3 per cent); Victoria 5.6 per cent (5.7 per cent); Queensland 6.5 per cent (6.2 per cent); South Australia 6.8 per cent (7.1 per cent); Western Australia 5.6 per cent (5.5 per cent); Tasmania 6.3 per cent (6.8 per cent). In trend terms unemployment in the Northern Territory rose from 4.4 per cent to 4.5 per cent; ACT unemployment fell from 4.2 per cent to 4.1 per cent.</span></p>
<p><span>Jobs across states and territories in April: NSW +8,400; Victoria +100; Queensland -5,600; South Australia +5,400; Western Australia +700; Tasmania unchanged. Trend terms: Northern Territory -100; ACT unchanged.</span></p>
<p>Why is the data important?</p>
<p><span>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.</span></p>
<p><span>If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work </span><span>hours</span><span> of employees. If employees work less </span><span>hours</span><span>, and therefore get paid less, then spending power in the economy is reduced.</span></p>
<p><span><strong>What are the implications?</strong></span></p>
<p><span>Labour market conditions have certainly improved over the past 18 months; business conditions are healthier; profitability has improved; and more importantly the housing sector is providing significant support to an array of industries. However the upcoming election has resulted in a more cautious tone across the economy.</span></p>
<p><span>The fact that the national unemployment rate is holding at 5.7 per cent – the lowest levels in 2½ years – will provide a big boost to confidence amongst Aussie consumers. And as we saw over the latter part of 2015, job security plays a big part in household consumption. However with a lack of wage growth, household real incomes could face pressure over the medium term and that is likely to be another reason why we expect that the Reserve Bank will contemplate another rate cut in August.</span></p>
<p><span><em>Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a></em></span></p>
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First annual decline in hours worked in 3 years: CommSec's Savanth sebastian

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<p>GUEST OBSERVER</p>
<p>The emerging new trend for slightly softer participation is something we are watching closely. Also note that annual growth in total hours worked was negative this month.</p>
<p>There was not much excitement in the 10.8k rise in total employment in April as was enough to lift the annual pace to 2.1 percent/yr from 2.0 percent/yr and hold the unemployment rate flat at 5.72 percent.</p>
<p>On these two headline numbers there is not much to make you want to alter neither your trajectory for the Australian labour market nor how you think about the outlook for monetary policy.</p>
<p><a href="/images/2016/05/18/Screen%20Shot%202016-05-19%20at%202.25.19%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/05/18/Screen%20Shot%202016-05-19%20at%202.25.19%20PM.png" alt=""></p>
<p>However, there are still some key issues that come to light from the current survey. First is further confirmation that employment growth is concentrated in female and part-time employment.</p>
<p>I<span style="line-height: 1.3em;">n the year to April, part-time employment has grown 160.9k (4.5 percent/yr) while full-time employment has growth 83.8k (1.0 percent/yr). </span></p>
<p><span style="line-height: 1.3em;">Given that full-time employment represents 69 percent of total employment that in the last year we have added twice as many part-time employees as full-time employees it really highlights the significant shift the economy is experiencing. Furthermore, female employment has grown 164.4k (3.1 percent/yr) in the year to April which is more than double the 80.3k gain (1.3 eprcent/yr) in male employment. As we have noted previously, this highlight the big shift in employment growth from the previously booming resources sectors to the more modestly growing services sectors as these sectors have a much higher proportion of female and part-time workers in their labour force.</span></p>
<p><a href="/images/2016/05/18/Screen%20Shot%202016-05-19%20at%202.25.52%20PM.png" target="_blank"><span style="line-height: 1.3em;">Click to enlarge</span></a></p>
<p><span style="line-height: 1.3em;"><img src="/images/2016/05/18/Screen%20Shot%202016-05-19%20at%202.25.52%20PM.png" alt=""></span></p>
<p>The second key issue is that the participation rate was flat in April. From January 2014 there has been a trend rise in participation which has been driven mostly by a rise in female participation and in particular, a rise in female participation in NSW. However, participation appears to have peaked in the last quarter of 2015 averaging 64.1 percent, up from 65.0% in Q3, then moderate to 64.9 percent in the first quarter of 2016. Printing 64.9 percent in April is does look as if participation is holding around these new levels rather than drifting higher.</p>
<p>It is also worth noting that a return of a small trend decline in male participation has been key to this moderation. Female participation has been volatile of late but the trend appears to be holding the new higher level.   </p>
<p>There was one indicator that suggests we should be cautious about being too optimistic about the near term employment outlook. Total hours worked fell 1.1 percent in April, following a –1.1 percent print in March, to be down 0.5 percent in the year. Compare this to the 2.1 percent/yr gain in total employment. As we illustrate in our chart, a negative print from growth in hours worked has tended to, but not always, been consistent with either softer growth in total employment and/or marginally led a dip in total employment. That is it could be a potential signal for softer employment numbers sometime in the next few months.</p>
<p><em>ustin Smirk is ‎senior economist, Westpac Group and can be contacted <a href="https://www.westpac.com.au/about-westpac/westpac-group/" target="_blank">here</a>.</em></p>
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Annual growth in total hours worked negative for April: Westpac's Justin Smirk

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<p>GUEST OBSERVER</p>
<p>Wages growth remains weak. The wage price index rose just 2.1 percent y/y in the first quarter of 2016, the lowest rate on record in this series.</p>
<p>The weakness likely reflects both domestic and global factors. Unemployment remains elevated in Australia, but even in those economies at, or close to, full employment wage growth has remained low. We expect wages growth to remain soft over the next year or so, which will keep inflation low, while also remaining as a headwind to household spending. </p>
<p><a href="/images/2016/05/18/Screen%20Shot%202016-05-18%20at%204.07.55%20PM.png" target="_blank"><span style="line-height: 1.3em;">Click to enlarge</span></a></p>
<p><img src="/images/2016/05/18/Screen%20Shot%202016-05-18%20at%204.07.55%20PM.png" alt=""></p>
<p><span style="line-height: 1.3em;">Growth in the wage price index (WPI) slowed further in Q1. Wages rose just 0.4 </span>percent<span style="line-height: 1.3em;"> q/q and 2.1 </span>percent<span style="line-height: 1.3em;"> y/y – on both measures growth is the slowest on record. </span></p>
<p>Wage growth in the private sector at +0.4 percent q/q / +1.9 percent y/y remains softer than in the public sector at +0.5 percent q/q / +2.5 percent y/y, while wage growth continues to slow across industries and states. Not surprisingly, private-sector wages growth is slowest in WA and Queensland at 1.6% y/y and 1.7 percent y/y respectively. </p>
<p>We expect wages growth will remain subdued for some time. While elevated unemployment and a further adjustment in Australia’s relative labour cost structure will continue to be important drivers, weak wages growth is an increasing global phenomenon. </p>
<p><a href="/images/2016/05/18/Screen%20Shot%202016-05-18%20at%204.09.02%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/05/18/Screen%20Shot%202016-05-18%20at%204.09.02%20PM.png" alt=""></p>
<p>In its recent inflation forecast downgrade, the RBA clearly reassessed its view on the wages outlook. Yesterday’s minutes noted that “the forecasts embodied the expectation that growth in the wage price index would stabilise around current quarterly growth rates before gradually picking up later in the forecast period”. On that front, these numbers look to be marginally weaker than the Bank’s expectations. </p>
<p><a href="/images/2016/05/18/Screen%20Shot%202016-05-18%20at%204.10.06%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/05/18/Screen%20Shot%202016-05-18%20at%204.10.06%20PM.png" alt=""></p>
<p><span style="line-height: 1.3em;">Weak wage growth will keep inflation low. Today’s numbers suggest that growth is yet to stabilise on this measure. This suggests that the risks to the inflation outlook remain tilted to the downside, and household income growth will continue to be a constraint on consumer spending. </span></p>
<p> <em>Felicity Emmett co-head of Australian economics, ANZ Research and can be contacted <a href="https://www.anz.com/corporate/research/" target="_blank">here</a>.</em></p>
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Australian wages growth continues to slow: ANZ's Felicity Emmett

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<p><span>GURST OBSERVER</span></p>
<p><span>Wage inflation in Qld has moderated down to the pace in WA even though the mining invesment hit is greater in the latter state.</span></p>
<p><span>Total hourly wage rates ex bonuses (WPI) lifted 0.4 percent in Q1, less than market’s expectation for a 0.5 percent rise. Westpac forecast was for a 0.4 percentqtr rise in the WPI. This follows on from a rise of 0.5 percent in Q4 and 0.6 percentqtr rise in each of the two quarters before.</span></p>
<p><span>The annual pace is a new record low for the Index at 2.1 percentyr. This is a moderation from 2.2 percentyr in Q4 and the recent peak of 2.5 percentyr in 2015Q4. The WPI started in the September quarter of 1997.</span></p>
<p><span>More dramatic has been the deceleration in private sector wage inflation. Lifting just 0.4 percentqtr this followed a 0.5 percentqtr rise in each of the previous four quarters. Before that it had a run of three quarters printing 0.6 percentqtr each quarter.  As such, the annual pace has hit a new record low of 1.9 percentyr. Private sector wage inflation recent peak was 4.0 percentyr in 2011Q1 and has been moderating ever since.</span></p>
<p><span>There was, however, some more positive news. The annual pace of growth in wages rates when you also include bonuses lifted to 2.5 percentyr in Q1. But before you get too excited this was more to do with base effects than an improvement in the underlying pace. In the quarter, total wages included bonuses lifted 0.4 percent compared to 0.5 percent in Q4 and 1.0 percent in Q3 but as it is up on the surprising 0.2 percent in 2015Q1 it boosted the annual pace.</span></p>
<p><span>The moderation in wages may also be due to the shifting composition of employment gains, from mining and construction to hospitality and other household services. These sectors seem to be able to draw in a greater supply of labour (noticeable in the rising female participation) and tend to have weaker collective bargaining power.</span></p>
<p><span>Public sector wage inflation printed 0.5 percent in the March quarter from 0.5 percent in the December quarter and an average of 0.7 percentqtr in the previous four quarters. The annual pace was flat at 2.5 percentyr which is a moderation from the recent peak of 2.7 percentyr in 2015Q3. Post the GFC, public sector wage inflation peaked at 3.9 percentyr in 2010Q4.</span></p>
<p><span>Wage inflation lifted a touch in WA to 2.0 percentyr as Qld held a 1.9 percentyr pace to now have the lowest rate of total wage inflation for any mainland state. ACT overall holds the award for the lowest rate of wages growth at 1.8 percentyr. However, at 1.6 percent WA has the lowest rate of private sector wage inflation. NSW wages growth was flat at 2.1 percentyr while Vic wages growth was also flat but at a higher pace of 2.4 percentyr. SA spit the difference of the two recording a 2.2 percentyr pace.</span></p>
<p><span>Wage inflation is underperforming what the broader labour market indicators are suggesting it should be. Wage pressures are well contained as the temperature cools in the former hot sectors and industries. This presents a very benign outlook for inflation and one that is set to remain so given modest job gains, increasing market competition in the retail space in particular, declining inflation expectations and rising supply of workers in the sectors that are expanding (as exemplified by rising female participation).</span></p>
<p><span>Depending on which deflator you use, real wage inflation is benign at 0.8 percent/yr (headline CPI) or 0.5 percentyr (using average of the RBA core measures).<br><br></span></p>
<p><span><em>Justin Smirk is ‎senior economist, Westpac Group and can be contacted <a href="https://www.westpac.com.au/about-westpac/westpac-group/" target="_blank">here</a>.</em></span></p>
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