<p><a href="https://www.apartments.com.au/developers/coronation-property">Coronation Property</a> has received development approval for Archer &amp; Albert, a 32-storey, mixed-use residential development in the heart of Chatswood.</p>

<p>Located at 57–61 Archer Street and 34 Albert Avenue, <a href="https://www.apartments.com.au/new-apartments/archer-albert-chatswood-57-61-archer-street-chatswood-nsw-2067">Archer &amp; Albert</a> will deliver 150 new homes, including affordable housing, alongside ground-floor and podium retail, commercial space, a heritage house activated as a café, additional ground-level activation, and a landscaped publicly accessible park designed for community use.&nbsp;</p>

<p><a href="https://www.apartments.com.au/new-apartments/archer-albert-chatswood-57-61-archer-street-chatswood-nsw-2067">Archer &amp; Albert</a> is one of the few large-scale residential developments in the heart of Chatswood City to progress through a council-led architectural design competition and secure development approval, positioning it at the forefront of design led housing.&nbsp;</p>

<p><img alt="Archer" data-entity-type="file" data-entity-uuid="33cb754a-1493-4203-bd16-096d320597f6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/A%2BA_C03_EXT_StreetScape_ID1.jpg?VersionId=oLUPFVAMxuRUTH1Bwki16R48cEo.vLeB" /></p>

<p>Designed by global architecture practice <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a>, long-term collaborators of the Coronation team, the project draws inspiration from the Sydney Blue Gum High Forest and the leafy character of the South Chatswood Heritage Conservation Area. The design integrates a restored heritage-listed home and establishes a landscaped connection between Chatswood’s urban centre and its surrounding residential neighbourhoods.&nbsp;</p>

<p>“This is an important project for us and our first entry into the North Shore,” said Joe Nahas, Managing Director of &nbsp;Coronation Property.&nbsp;</p>

<p>“We are deliberate about where we invest and build, <a href="https://www.apartments.com.au/developments/chatswood-nsw-2067">Chatswood</a> stands out because the fundamentals are already strong. Transport, employment, education, retail and health are all in place. Archer &amp; Albert is about adding new housing into a centre that already works and building on what exists.”&nbsp;</p>

<p><img alt="Chatswood" data-entity-type="file" data-entity-uuid="620fcd78-00be-489b-823a-ca353387b91b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/A%2BA_C04_EXT_PARK_HA_ID2.jpg?VersionId=NxSl04Zl1rzt94xlXNA6CNzSR9XMyLgP" /></p>

<p>Aras Labutis, Head of Urban Transformation at <a href="https://www.apartments.com.au/developers/coronation-property">Coronation Property</a>, said the project reflects a disciplined, collaborative approach to city shaping.&nbsp;</p>

<p>“Chatswood sits at an important junction between high-density commercial activity and established residential &nbsp;neighbourhoods," Labutis said.</p>

<p>"Our focus for Archer &amp; Albert was to manage that transition carefully, respecting what’s already there &nbsp;while contributing something new that feels deliberate and enduring."</p>

<p>The approved scheme delivers:&nbsp;</p>

<ul>
	<li>A 32-storey mixed-use tower comprising 150 homes, including 41 affordable housing dwellings • 530sqm of ground-floor retail, dining and commercial offerings&nbsp;</li>
	<li>A 760sqm wellness tenancy integrated within the podium&nbsp;</li>
	<li>A restored heritage building, thoughtfully reimagined as a café overlooking the park&nbsp;</li>
	<li>A landscaped public park, designed as a calm green retreat in the heart of Chatswood&nbsp;</li>
	<li>Resident amenities include a premium gym, golf simulator, mahjong room, dedicated wellness areas, private &nbsp;dining facilities and a curated wine room&nbsp;</li>
	<li>Deep private balconies designed to capture outlooks and northern light&nbsp;</li>
	<li>A refined material palette of natural stone, timber and terracotta&nbsp;</li>
</ul>

<p>[smartcode_project_cta:default project_id=29796]</p>


Joel Robinson

Coronation receives green light for Archer & Albert apartments in Chatswood

<p>Leading Sydney developer <a href="https://www.apartments.com.au/developers/deicorp">Deicorp</a>, in partnership with Metrics Credit Partners, has officially broken ground on its landmark $1.8 billion Kings Bay Village project in <a href="https://www.apartments.com.au/developments/five-dock-nsw-2046">Five Dock</a>, marking the beginning of construction on one of the most significant urban renewal precincts within the Parramatta Road Corridor.</p>

<p>A sod-turning ceremony was held at the project site on Parramatta Road, with NSW Premier Chris Minns and NSW Planning Minister Paul Scully joining Deicorp Chairman Fouad Deiri OAM and Metrics CEO and Managing Partner Andrew Lockhart, to mark the significant milestone.</p>

<p>Located at 129-154 Parramatta Road, <a href="https://www.apartments.com.au/new-apartments/kings-bay-village-five-dock-53-75-queens-road-five-dock-nsw-2046">Kings Bay Village</a> will transform more than three hectares of underutilised land into a highly connected new neighbourhood comprising 1,185 homes, including 218 affordable dwellings for essential workers, alongside new retail, commercial, and community spaces.</p>

<p>[smartcode_project:default project_id=146120 project_image_fid=356895]</p>

<p>Designed by award-winning architects <a href="https://www.apartments.com.au/architects/turner-studio">TURNER</a>, the precinct blends crafted brick architecture with a pedestrian-focused urban layout across six buildings of varying scale. The project will deliver 14,700sqm of retail and commercial space, 6,500sqm of public open space, and a new 2,290sqm landscaped park and civic plaza that will form the social heart of the community.</p>

<p>Kings Bay Village is positioned minutes from the future Five Dock Metro Station, supporting the NSW Government and City of Canada Bay Council’s shared ambition for a more connected, liveable and revitalised Parramatta Road Corridor. Deicorp will also contribute more than $80 million towards new and upgraded local infrastructure, including pedestrian laneways, an activated streetscape and significant public domain works.</p>

<p>Fouad Deiri OAM, Chairman of Deicorp, said Kings Bay Village represents a defining opportunity for Sydney’s Inner West.</p>

<p>&nbsp;“Today marks the beginning of a precinct that will deliver lasting benefits for the Five Dock community - new homes, new open spaces, and a vibrant mixed-use environment that brings people closer to transport, services and amenities,"&nbsp;Deiri says.</p>

<p>“We are proud to be delivering much-needed housing, including affordable homes for essential workers, in partnership with the NSW Government and the City of Canada Bay. Kings Bay Village is urban renewal at its best - thoughtful, connected and community-focused.”</p>

<p>[smartcode_project:default project_id=146120 project_image_fid=356894]</p>

<p>Metrics CEO and Managing Partner Andrew Lockhart said the company is proud to support more housing and infrastructure in a key Sydney corridor.<br />
&nbsp;<br />
“Metrics and Deicorp share a proven track record of delivering high-impact projects that align closely with the NSW Government’s housing and infrastructure priorities. Kings Bay Village marks our most significant Sydney development to date, offering quality homes, essential infrastructure, and dynamic public spaces.”<br />
&nbsp;<br />
“This project reflects our ongoing commitment to creating value by supporting economic growth, job creation, and delivering excellent outcomes for our investors,” he said.</p>

<p>With Kings Bay Village now underway, Deicorp’s pipeline of apartments under construction across Sydney has increased to 5,102. Kings Bay Village is scheduled for completion in Q2 of 2029.</p>

<p>[smartcode_project_cta:default project_id=146120]</p>


NSW Premier and Planning Minister join Deicorp and Metrics to break ground on $1.8 billion Kings Bay Village precinct

<p>When Antoinette Chan and her architect husband, Peter began casually searching for an investment property, they weren’t expecting it to evolve into a life-changing family decision.</p>

<p>But one visit to the display suite of <a href="https://www.apartments.com.au/developers/abadeen-group">Abadeen</a>’s <a href="https://www.apartments.com.au/buildings/koyo-crows-nest-1-11-rodborough-avenue-crows-nest-nsw-2065">KOYO</a> development in Crows Nest changed everything, and sparked a remarkable story of three generations choosing to live side by side in one of the suburb's most architecturally-striking new developments.</p>

<p>Antoinette, her mother Janet Khoo, and her sister, who is currently living in Singapore, each purchased an apartment in the same building, creating a rare and meaningful multi-generational living arrangement underpinned by modern design, community values, and premium convenience.</p>

<p>[smartcode_project:default project_id=108800 project_image_fid=356083]</p>

<p>“It wasn’t planned,” says Antoinette, who purchased a three-bedroom garden apartment with her husband and teenage daughter. “Peter came across KOYO and encouraged me to visit because he had a lot of respect for Abadeen’s previous work. As soon as we saw it, we knew it wasn’t just an investment, this was a home.”</p>

<p>Shortly after, Antoinette suggested her mother, Janet Khoo, take a look at the same development. A long-time inner-city resident who had recently sold her property in The Rocks, Janet had experienced some health setbacks and was contemplating a move closer to her daughter.</p>

<p>“I walked into the display apartment, and it just felt right,” says Janet. “I didn’t look anywhere else. The space, the simplicity of the design, the light, everything gave me a sense of peace. It’s a new beginning, but it also feels like home.”</p>

<p>[smartcode_project:default project_id=108800 project_image_fid=356093]</p>

<p>In a stroke of serendipity, Janet selected the two-bedroom apartment next door to her daughter, completely unaware of Antoinette’s purchase. Around the same time, Antoinette’s sister, who resides in Singapore, viewed the property via a virtual tour and chose to buy the apartment directly above Janet’s.</p>

<p>“We were all drawn to KOYO individually, and it just happened that our homes ended up vertically stacked, ground, first, and second floor,” Antoinette laughs. “It was a coincidence, but also a sign. This is where we’re meant to be.”</p>

<p>Designed by celebrated architect <a href="https://www.apartments.com.au/architects/koichi-takada-architects">Koichi Takada</a>, KOYO delivered on all fronts for the Chan-Khoo family.</p>

<p>“Our garden apartment gives us the feel of a standalone home but with none of the maintenance,” says Antoinette. “All three bedrooms open onto a generous private garden, which is perfect for our dog Archie, and for entertaining. The open-plan layout and high ceilings make it feel airy, calm and luxurious.”</p>

<p>[smartcode_project:default project_id=108800 project_image_fid=356092]</p>

<p>For Janet, security and accessibility were top priorities, and KOYO offered the ideal balance.</p>

<p>“At my age, I didn’t want to be climbing stairs,” she explains. “The first-floor apartment opens directly to the garden, and the building is small, which gives it a more personal, village-like feel. Yet I’m just steps away from my daughter and granddaughter. That gives me so much peace of mind.”</p>

<p>The family also appreciated the thoughtful amenities that avoided the excesses of some larger developments.</p>

<p>“We didn’t want a complex with too many facilities we wouldn’t use,” explains Antoinette. “KOYO has everything we need, generous storage, secure parking, beautifully landscaped walkways, and a stunning rooftop terrace with BBQ facilities that feels serene rather than busy.”</p>

<p>[smartcode_project:default project_id=108800 project_image_fid=355428]</p>

<p>The location was another critical factor in the family’s decision. Though they had always lived closer to Sydney’s eastern suburbs, Antoinette says the transformation of Crows Nest was a revelation.</p>

<p>“When we returned from living overseas, we discovered Crows Nest had become this vibrant, walkable hub,” she says. “We love being able to stroll to cafés, restaurants, and shops on Willoughby Road. The new Metro makes the commute into the CBD effortless, and our daughter can walk to her school, it’s just next door."</p>

<p>Janet agree. “I was worried about giving up my inner-city lifestyle, but I’ve fallen in love with this area. It has everything I need, supermarkets, quiet streets, friendly faces, and it’s all a short walk away. I feel safe, independent, and connected.”</p>

<p>[smartcode_project:default project_id=108800 project_image_fid=356085]</p>

<p>While design and location were important, the family also credits their decision to Abadeen’s reputation and responsiveness. With decades of experience delivering high-quality residential projects, Abadeen’s track record helped build trust during a volatile market period.</p>

<p>“The waiting game was tough, especially after selling my old apartment,” says Janet. “But the Abadeen team kept me updated every step of the way. They were professional, courteous, and transparent.”</p>

<p>Antoinette said Peter works in property and had already heard of Abadeen. "The quality of their work really impressed us, and as the project neared completion, they went above and beyond to keep us informed and supported. That level of communication is rare.”</p>

<p>Only a handful of three-bedroom residences remain for sale, priced from $3.5 million.</p>

<p>[smartcode_project_cta:default project_id=108800]</p>


Three generations, one address: How a family found sanctuary and connection at Abadeen's KOYO in Crows Nest

<p>Sydney-based developer Gold Partners Australia is making its move on the Gold Coast, launching what is one of the most affordable towers to the booming Broadbeach market.</p>

<p>Its <a href="https://www.apartments.com.au/new-apartments/harmony-on-broadbeach-2797-gold-coast-highway-broadbeach-qld-4218">Harmony on Broadbeach</a> project, just 400m from the beach, has prices starting from $975,000 for its two-bedroom apartments that measure nearly 90 sqm internally.</p>

<p>[smartcode_project:default project_id=113098 project_image_fid=355607]</p>

<p>There will be 113 two- and three-bedroom apartments spread out across the 33-storey tower on the 1,201 sqm site that will front First Avenue. Gold Partners Australia, which has delivered several major projects in Sydney's Norwest and has an active pipeline with projects in Hornsby and Carlingford, secured the block vacant, and want to start preliminary site works early next year through their in-house construction capability.</p>

<p>DBI Architects designed the tower with a four-level podium which will have an open-air swimming pool, sun deck, outdoor lounges, alfresco dining spaces, and a gym with adjoining yoga lawn. A hospitality venue will anchor the building at street level.</p>

<p>[smartcode_project:default project_id=113098 project_image_fid=355611]</p>

<p>Olympus Property Group is selling Harmony on Broadbeach on behalf of Gold Partners Australia. Olympus Director Deanna Lockett says the project is resonating with everyone from locals, investors, those moving from interstate, and second home buyers from Brisbane.</p>

<p>"There's been nothing new come to the market in Broadbeach at this price point for nearly a year," Lockett recalls. "It hits the sweet spot of affordability, good sized apartments, in a great location."</p>

<p>Construction will commence in Q2 2026, and wrap up, all going well, by the end of 2028.</p>

<p>[smartcode_project_cta:default project_id=113098]</p>


Harmony on Broadbeach launches to booming Gold Coast suburb

<p data-end="205" data-start="95">Display apartments play a crucial role in helping buyers imagine how a space will look and feel once complete.</p>

<p data-end="485" data-start="207">At <a href="https://www.apartments.com.au/new-apartments/the-albertine-by-mirvac-melbourne-31-queens-lane-melbourne-vic-3004">The Albertine</a> in Melbourne, development giant Mirvac has partnered with furniture maker and retailer MCM House to create a fully furnished, full-scale prototype that showcases the proportions, finishes, and design intent of the project’s three-bedroom residences.</p>

<p data-end="758" data-start="487">As an added incentive, purchasers of any two- or three-bedroom apartment can receive up to $50,000 worth of MCM House furniture, allowing them to curate their new home with the same craftsmanship, contemporary design, and aesthetic showcased in the display apartment.</p>

<p><a data-entity-type="file" data-entity-uuid="ae2e947b-2d51-4288-88fa-a35638e3be0f" href="https://www.apartments.com.au/new-apartments/the-albertine-by-mirvac-melbourne-31-queens-lane-melbourne-vic-3004"><img alt="Albertine" data-entity-type="" data-entity-uuid="" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-11-25%20at%209.27.26%E2%80%AFAM_1.png?VersionId=T5uSwgtTFwd1m5EdQF1inB.tBDgxqbtZ" /></a></p>

<p data-end="758" data-start="487">Oversized sofas, solid timber dining tables, and relaxed, low-profile seating demonstrate how the space accommodates real furniture, helping buyers clearly visualise how their new apartment could look, complete with pieces that genuinely suit the scale and design of the home.</p>

<p data-end="758" data-start="487">The styling is simple but deliberate, with materials that pick up on the apartment’s natural light and neutral tones, creating cohesion without crowding the space.</p>

<p data-end="758" data-start="487"><a data-entity-type="file" data-entity-uuid="355f10d8-ee75-4546-a42e-4a54abcc806e" href="https://www.apartments.com.au/new-apartments/the-albertine-by-mirvac-melbourne-31-queens-lane-melbourne-vic-3004"><img alt="Albertine" data-entity-type="file" data-entity-uuid="3e0b920b-3f17-47f0-8885-f67697a5f842" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-11-25%20at%201.17.07%E2%80%AFPM.png?VersionId=tPcmBls5kt_SLqE2ONXrxgk5SnC1xERs" /></a></p>

<p data-end="1126" data-start="760">Mirvac is now welcoming buyers through the display at The Albertine. Quietly yet conveniently positioned just off St Kilda Road on Queens Road, the development has attracted strong interest from inner-Melbourne and Bayside downsizers, professional couples seeking luxurious low-maintenance living, and design-focused buyers who want proximity to the CBD.</p>

<p>Apartments have been designed by Mirvac's inhouse design team with owner-occupiers at the forefront.&nbsp;The living and dining areas open directly onto a balcony, reinforcing the project’s emphasis on indoor-outdoor flow, while kitchens feature integrated appliances and soft-curve cabinetry which mirror the larger architectural themes at play throughout the building.</p>

<p><a data-entity-type="file" data-entity-uuid="e8f9b371-17e1-4122-a615-074113096135" href="https://www.apartments.com.au/new-apartments/the-albertine-by-mirvac-melbourne-31-queens-lane-melbourne-vic-3004"><img alt="Albertine" data-entity-type="" data-entity-uuid="" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-11-25%20at%209.30.16%E2%80%AFAM.png?VersionId=NCYvtMavnE1_YDhX6slAr7g84MWP0Ymp" /></a></p>

<p>The Albertine offers one to four-bedroom residences complemented by exclusive resident-only amenity, including The Circadian Club, a wellness centre with an indoor pool and spa, gym, yoga and Pilates studio, and sauna, as well as The Elysian Room, a private dining space on level 10 with sweeping views across Melbourne.</p>

<p>Mirvac will welcome residents to The Albertine in 2026, having recently celebrated topping out the&nbsp;</p>

<p><a href="https://www.apartments.com.au/developers/mirvac">Mirvac</a>&nbsp;recently topped out&nbsp; the topping out of The Albertine, with completion expected in 2026.</p>

<p>To find out more about the generous furniture offer with MCM House, enquire below.</p>

<p>[smartcode_project_cta:default project_id=138659]</p>


Mirvac unveils The Albertine display, offering up to $50k in MCM House furniture

Labour Market

<html><body>
<p>The rapidly improving labour market is likely to spur confidence and housing affordability, adding upward pressure to already strong house prices, according to Archistar chief economist Dr Andrew Wilson.</p>

<p>His comments come after the Australian Bureau of Statistics unveiled a sharp fall in jobless rates for February, to near-pre-COVID levels.</p>

<p>[smartcode_project:default project_id=27070]</p>

<p>“The unemployment rate has fallen sharply over February and is now remarkably within striking distance of pre-COVID shutdown levels, less than a year from the commencement of the pandemic.</p>

<p>“The ABS reports that the national unemployment rate seasonally adjusted fell sharply by 0.5% over February to 5.8% - the lowest rate since the pre-covid result of 5.2% recorded over March 2020.</p>

<p>“The number employed nationally has now almost recovered to pre-covid levels to be now down by just 1800 since March 2020."</p>

<p>[smartcode_project:default project_id=7758]</p>

<p>Dr Wilson noted all states reported falls in the jobless rate over February with QLD the best performer falling by 0.8%. NSW and VIC reported the lowest jobless rates at 5.6%.</p>

<p>“Capital city housing markets have recorded strong buyer demand this year so far with prices rising sharply – particularly in Melbourne and Sydney.," he said.</p>

<p>“And concerns over the possible significant negative impact on the economy of the tapering of the Job Keeper allowances at the end of this month will also likely to be to be misplaced – again.”</p>
</body></html>

The rapidly improving labour market is likely to add upward pressure to already strong house prices, according to Archistar chief economist Dr Andrew Wilson.

jchancellor

Low unemployment to add upward pressure on house prices

<html><body>
<h3 class="post-title entry-title"><a href="https://petewargent.blogspot.com.au/2016/11/labour-market-weakness-under-hood"></a></h3>
<div id="post-body-5100146898223249015" class="post-body entry-content">Let's begin with the good news, because I'm in a jolly good mood and don't want to spoil it.<br><br>It won't take long anyway, as there isn't really that much good news to report!<br><br><div>The unemployment rate ticked down to 5.35 percent in original terms, the lowest in well over three years.</div>
<div> </div>
<div>In seasonally adjusted terms the unemployment rate of 5.58 percent was the lowest in 42 months, and well below the 6.32 percent seen in January 2015 (click the graphics to expand, as always!).<br><br>
</div>
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<div>Drilling the trend line through the figures, the unemployment rate of 5.6 percent looks healthy enough. </div>
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<img src="/images/2016/11/18/B3.jpg" alt=""><br><div> </div>
<div>In New South Wales the trend unemployment rate has continued to decline to just 4.89 per cent, the lowest figure in nearly six years, while Victoria and Queensland are also moving in the right direction.<br><br>The trend hasn't caught up but Queensland's seasonally adjusted unemployment rate dropped to 5.8 per cent. Bonzer.</div>
<div> </div>
<div>Tasmania and Western Australia are heading the other way. </div>
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<br><div>Although not charted here due to their respective small sample sizes, the unemployment rates in the Northern Territory (3.5 per cent) and the ACT (3.4 per cent) are low. </div>
<br>OK, that's great. Now brace for the not-so-cheerful news....<br><br><div><strong><span style="text-decoration: underline;">"Jobs and growth?" Maaate...</span></strong></div>
<div> </div>
<div>Hiring is usually strong at this time of year, and total employment increased by about +78,800 over the last two months.</div>
<div> </div>
<div>After accounting for seasonality, however, this month's increase was only +9,800, although that figure did at least include a vast swing back to full-time employment of +41,500. </div>
<div> </div>
<div>This all sounds cool until we revisit what happened last month, which was a big seasonally adjusted drop in employment, while full-time employment is nearly 90,000 lower than at the beginning of the year.</div>
<div> </div>
<div>Looking through the noise, the trend in employment growth now looks poor. </div>
<div> </div>
<div><a href="/images/2016/11/18/B4.jpg" target="_blank">Click to enlarge</a></div>
<br><div class="separator"><img src="/images/2016/11/18/B4.jpg" alt=""></div>
<br><div>Another way to look at this is to view the annual trend employment change, which has dropped to +108,100, or an a trend annual increase of only +0.9 percent. </div>
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<br><div class="separator"><img src="/images/2016/11/18/B5.jpg" alt=""></div>
<br><div>The annual rate of employment growth is at its lowest level in 23 months and is now below the rate of population growth, and categorically 'not good enough'!</div>
<div> </div>
<div>Victoria has now cruised to the top of the employment growth charts, with Victoria (+107,300) and New South Wales (+46,100) accounting for more than all of the net employment growth over the past year.<br><br>Employment in Tasmania dived by -3,400 in October to be -4,300 lower than a year ago. </div>
<div> </div>
<div>Queensland employment fell by -16,900 in the month, and by -46,000 over the year. This month's result was a rogue statistic due to the sample rotation from September, though there's no question that employment in aggregate has weakened in the Sunshine State, led by resources-related job losses in locations such as Townsville. </div>
<div> </div>
<div>I'll look at the Queensland figures by region in more detail next week. </div>
<div> </div>
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<br><div class="separator"><img src="/images/2016/11/18/B6.jpg" alt=""></div>
<br><div>Shadow Treasurer Scott Emerson highlighted that 67,600 jobs had been lost in Queensland since the beginning of the year and that "anyone who sees today's result as good news doesn't understand how tough it is to find a job in Queensland".</div>
<div> </div>
<div>He's right about the second part, but clearly he didn't read the commentary on the incoming sample and cocked up his numbers by calculating them from the end of January rather than the beginning. Maybe that was deliberate. Oh well, at least his job doesn't require strong numeracy skills! </div>
<br><strong><span style="text-decoration: underline;">The wrap</span></strong><br><div> </div>
<div>While the unemployment rate superficially looks positive, the participation rate is well down and now at the lowest level since early 2006. </div>
<div> </div>
<div>Despite a much improved monthly result, total hours worked - as useful an indicator as any when looking at a volatile survey - increased by only +0.9 per cent over the year to October, and less in trend terms. </div>
<div> </div>
<div>And despite the wild swing back to full-time employment this month, it's important to see through the monthly noise and understand that much of the growth in jobs has been part-time in nature over recent times.</div>
<div> </div>
<div>Therefore, we have the weakest nominal wages growth on record, some of the weakest non-tradables inflationary pressures on record, and weak employment growth across recent months. </div>
<div> </div>
<div>Sounds like the easing cycle isn't over to me, but markets remain tentative for now, and job vacancies figures have admittedly been solid enough.<br><br>I will just note that when the labour force report prints solidly most commentary states that it must be somehow wrong, yet when the figures are weaker (as they are now) they are instantly taken at face value!<br><br>Something to bear in mind if the headline figure snaps back up next month...</div>
<div> </div>
</div>
<div class="post-footer"> 
<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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pwargent-M4siyDbqQY

Labour market: weakness under the hood

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<p><span>'Tis an odd thing, by but the </span>Detailed Labour Force<span> figures are so often overlooked or ignored by market commentary, though fortunately not by everybody. Here's ex-Reserve Bank boffin and now ANZ market economist Justin Fabo.</span></p>
<p><a href="/images/2015/10/26/Fabo.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/10/26/Fabo.jpg" alt=""></span></p>
<p> </p>
<div>Indeed so, the employment data has improved significantly for Brisbane over the year to September 2015. Let's take a look at the latest figures in 3 short parts.</div>
<div> </div>
<p><strong><span style="text-decoration: underline;">Part 1 - Large states</span></strong></p>
<div> </div>
<div>Most employment growth over the last 12 months has taken place in Sydney (+68k) and Melbourne (+55k)...but lookee here, because hey presto, regional New South Wales is now creating jobs again (+55k)!<br><br>Regional New South Wales has seen jobs created particularly in Newcastle &amp; Lake Macquarie, the Hunter Valley and the Illawarra. On the other hand regional Victoria has seen total employment decline.</div>
<p><a href="/images/2015/10/26/LF1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/10/26/LF1.jpg" alt=""></p>
<p><span>Looking at employment growth cumulatively in the two most populous states, we can see that the outlook in regional New South Wales has certainly improved, although the most employment is still created in the Greater Metropolitan area. </span></p>
<p><a href="/images/2015/10/26/LF2.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/10/26/LF2.jpg" alt=""></span></p>
<p> </p>
<p><span>Better still, the total figures reported for regional unemployment now seems to be declining again after a worrying surge through 2014.</span><br><br><span>This represents evidence that at least some of the fallout from mining and construction contract layoffs is now in the rear view mirror, at least from an employment perspective. While aggregate demand may still be in declining in some mining regions, many of those contracted for the construction phase of mining projects have now returned to the capital cities. </span></p>
<p><a href="/images/2015/10/26/LF3.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/10/26/LF3.jpg" alt=""></span></p>
<p> </p>
<p><strong><span style="text-decoration: underline;">Part 2 - Brisbane bounce</span></strong><br><br></p>
<div>The other location which created a material number of jobs over the past year was Brisbane (+34k).<br><br>In fairness - while not charted here due to immateriality - Hobart's small labour market has also been picking up very nicely (+3k).<br><br>Not so much doing elsewhere.</div>
<div> </div>
<div><a href="/images/2015/10/26/LF4.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/10/26/LF4.jpg" alt=""></div>
<div> </div>
<div><span>Piecing the jobs growth data together, over the past year the growth in employment has been almost entirely accounted for by Greater Sydney (30 per cent), Greater Melbourne (25 per cent), Greater Brisbane (15 per cent), and regional New South Wales (24 per cent).</span></div>
<div><span> </span></div>
<div><a href="/images/2015/10/26/LF5.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2015/10/26/LF5.jpg" alt=""></span></div>
<div> </div>
<div> </div>
<div>
<strong><span style="text-decoration: underline;">Part 3 - Unemployment dispersion</span></strong><br><br><div>The dispersion of unemployment rates across Australia continues.</div>
<div> </div>
<div>Amazingly enough Hobart recorded an unemployment rate of just 4.9 per cent in September, a remarkable turnaround as the Aussie dollar has depreciated, evidently boosting the local economy.<br><br>Unemployment has also declined steadily in Greater Brisbane (5.4 per cent) and Melbourne (6.3 per cent).<br><br>Meanwhile in Greater Sydney unemployment remains relatively low (5.3 per cent), though the Sydney result has been skewed higher by rising unemployment rates on the Central Coast, and in Blacktown.</div>
<div> </div>
<div>On the other hand, Perth (6.1 per cent) and Adelaide (7.6 per cent) have unemployment rates that remain in a clear uptrend.<br><br>Smoothing the original data on a rolling annual basis reveals the dispersion more clearly, with Hobart, Brisbane, and Melbourne showing the greatest improvement.</div>
<div> </div>
<div><a href="/images/2015/10/26/LF6.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/10/26/LF6.jpg" alt=""></div>
<div> </div>
<div>
<div>I've been concerned about unemployment rates in a number of regional centres of the last year or two, so it has been pleasing to see the reported unemployment rates falling sharply in cities such as Geelong (4.8 per cent), Newcastle (5.1 per cent), the Hunter (7.3 per cent), though unemployment rates remain too high for comfort in a number of Queensland regions.</div>
<br><div>Greater Brisbane's unemployment rate has ticked down to 5.9 per cent on a 12mMA basis after some elevated readings at the beginning of 2015, despite an unemployment rate of above 9 per cent in Logan-Beaudesert.</div>
<p><a href="/images/2015/10/26/LF7.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/10/26/LF7.jpg" alt=""></p>
<p> </p>
<p><span>On the other hand Greater Adelaide's unemployment rate is now tracking consistently at around 7.6 per cent or above, and has ticked up to 7.3 per cent on a 12mMA basis. </span></p>
<p><a href="/images/2015/10/26/LF8.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/10/26/LF8.jpg" alt=""></span></p>
<p><span> </span></p>
<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>
<p><span> </span></p>
</div>
</div>
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Brisbane looking up: Pete Wargent

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<p>EXPERT OBSERVATION</p>
<p class="textspacebefore">The October Labour Force Survey surprised with a 19.0k decline in employment; the market median was for a 15k gain while the lowest forecast in the range was +7k.</p>
<p class="textspacebefore">And just a day earlier there was a disappointing update on wages.</p>
<p class="textspacebefore">While the rise in the September quarter Wage Price Index (WPI) was on market expectations at 0.5% it was below our forecast as we had been hoping that a combination of stronger wages growth in Victoria and the 3%yr rise in the minimum wage would have fed through to broader wage increases. That it has not, and now with signs the labour market is weakening, our forecast for a trend rising in unemployment suggests this is about as good as it will get for wages.</p>
<p class="textspacebefore">Wednesday saw the release of the wages update and while there were some signs of (fading) wage pressure, particularly in Victoria, we were disappointed to see that these wage pressures had not spread further. In the last year the average quarterly rise in the WPI was 0.6% but this is a soft 0.6% with rounding as the quarterly prints were 0.5% (Q4 2018), 0.6% (Q1 2019), then 0.5% in Q2 and Q3.  In September the annual rate eased a touch to 2.2% from 2.3%, a pace it had held for previous four quarters and was, at best, a very modest acceleration from the low of 1.9% in 2017.</p>
<p class="textspacebefore">It is true that public sector wages are running a bit faster; in the quarter the annual pace eased to 2.5%yr from 2.6%yr in the June quarter, which was the fastest pace since December 2015. However, the weight for public sector wages is not large enough to change the overall picture, with private sector wages matching total wages - the annual pace for private wages easing to 2.2%yr from 2.3%yr in the June. The 2.4%yr pace in March 2019 was the fastest pace of private sector wage inflation since December 2014. </p>
<p class="textspacebefore"><img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/Justin_Images/OctNov2019/LFWagesPubPriv.JPG" alt=""></p>
<p class="textspacebefore">The state data did reveal some insights into wage dynamics but it also highlighted some significant questions. Much has been made of higher wage inflation in Victoria and how that it is associated with larger pay rises in the public sector, particularly for health workers. While it is true that health workers wage inflation is running faster in Victoria than the national average (4.3%yr vs 2.1% nationally and 3.0%yr NSW), this does not explain why construction, wholesale, accommodation &amp; food services, transport, media, and professional &amp; scientific services are also running at a faster pace than those industries' national averages.</p>
<p class="textspacebefore">In the end, Victorian private sector wages are running above the national average at 2.5%yr. Compare this to the 2.1%yr pace in NSW, 2.0% in Qld and 1.8% in WA. The only state with a faster pace of private sector wage inflation was SA at 2.6%yr.</p>
<p class="textspacebefore">As such, Westpac argues that the recent lift in wage inflation in Victoria was more to do with a tightening of labour market conditions there than outsized public sector wage gains. Victorian underutilisation fell almost 3ppt from early 2017 to early 2019. With a lag of around 6 months, this tightening in the labour market should lead a lift in wage inflation and, as expected, it did so from June 2017 with wage inflation lifting from 1.9%yr to a peak of 2.6%yr in June 2019.</p>
<p class="textspacebefore"><img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/Justin_Images/OctNov2019/LFWagesUnderState.JPG" alt=""></p>
<p class="textspacebefore">The real question in our mind is why NSW wages have not responded in the same way they have in Victoria. Underutilisation was never as high in NSW as it was in Victoria (14% vs. 16%) and it has fallen to an even lower level currently (12% vs. 13%) and yet the best wages could do in NSW was lift from a low of 1.9%yr in 2016 to a peak of 2.3%yr in March 2019.</p>
<p class="textspacebefore">With wages in NSW responding to earlier tight labour market conditions, and growth turning, employment growth has started to soften, and with robust participation, unemployment is expected to drift higher both nationally and, in particular, in NSW.</p>
<p class="textspacebefore">This puts at risk Westpac’s current forecast of wage inflation drifting modestly higher from here -  peaking around 2.4%yr in 2020/2021, and given how well contained wage inflation is across the nation, and between sectors, this modest uplift  now looks optimistic. Note that the RBA recently lowered their forecast for the WPI in the November SMP (released prior to this week's WPI print). The RBA sees annual wages growth holding at just 2.3% through the forecast horizon.</p>
<p class="textspacebefore">The wage update was followed by the October Labour Force survey which highlighted the risk of softer employment growth, and rising unemployment (and underemployment). The 19.0k decline in employment was a significant surprise (market median +15k) as was that most of this decline was accounted for in NSW (–10.3k).</p>
<p class="textspacebefore">However, the more meaningful data point was the 0.1ppt rise in the unemployment rate to 5.3%. While participation eased as you would expect with a weak employment print, 66.0% from 66.1%, the unemployment rate still bumped up to 5.3% (5.32% at two decimal places) from 5.2%.</p>
<p class="textspacebefore">Our expectation has been for the unemployment rate to rise. That is despite an easing in the female participation rate, but that easing will be insufficient to offset the softer growth in employment.</p>
<p class="textspacebefore"><img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/Justin_Images/OctNov2019/LFWagesPartRate.JPG" alt=""></p>
<p class="textspacebefore">Further pressure on the unemployment rate will come from a still robust participation rate amongst males.</p>
<p class="textspacebefore">Overall the interaction between our employment growth forecasts and participation outlook points to a lift to 5.6% in the unemployment rate by mid 2020.</p>
<p class="textspacebefore">Of further significance in the October Labour Force Survey was the jump in the underemployment rate to 8.5% (8.52% at two decimal places) from 8.3%. It was 8.54% back in August and the October update strengthens the trend drift higher in underemployment. This month there was a contraction in both full-time and part-time employment (–10.3k full-time and –8.7k respectively) driving a 0.2% decline in hours worked. This highlights a fundamental weakness in the report that is driving underemployment higher.</p>
<p class="textspacebefore"><img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/Justin_Images/OctNov2019/LFWgesWunemp.JPG" alt=""></p>
<p class="textspacebefore">This trend drift higher in underemployment, and the slower pace of gains in hours worked compared to total employment (1.4%yr vs. 2.0%yr), reinforces the observation of the broader slack in the labour market slack beyond the 5.3% unemployment rate.</p>
<p class="textspacebefore">We do, however, acknowledge the month to month volatility in the labour force survey and while the October update was weaker than anticipated, it was not enough to change our view that the labour market is softening gradually which will drive a modest rise in unemployment and underemployment. Our leading indicators of employment are suggesting that the annual pace should be somewhere around 2.0%yr. The current pace is 2.0%yr and it is our forecast for it to slow to around 1%yr in mid-2020.</p>
<p class="textspacebefore">The Australian economy is a long way away from the RBA’s full employment aim of 4.5% and if the RBA wants to use monetary policy to drive the economy in that direction, it has a lot more work to do. However, the gradual pace of the deterioration will allow the RBA time to monitor the economy before having to act again.</p>
<p class="textspacebefore">In our view, while rate cuts along with the Government’s tax offset payments should help to support demand, we think it will be insufficient to get economic growth moving back to trend or above in 2020. As such we see employment growth continuing to moderate in early 2020 and expect that the resulting decline in participation will provide only a partial offset. We hold to our view that unemployment is likely to hit 5.6% by mid-2020 and see clear downside risks to our forecast for a modest lift in wage inflation.</p>
<p><em><strong>JUSTIN SMIRK</strong> is ‎a senior economist for Westpac </em></p>
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j.ballantyne1990-6AQqhLzZaK

Australian wages run out of puff just as the labour market starts to soften: Justin Smirk

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<p>The unemployment rate has remained unchanged at 5.2% according to the recent figures from the ABS.</p>
<p>The figure is in line with market expectations.</p>
<p>The RBA are trying to drive the unemployment rate down to 4.5%, however the RBA <span>believe it needs to below 5% in order for the economy to see adequate wage growth.</span></p>
<p><span>The number of unemployed persons edged higher, from 697,000 to 701,700.</span></p>
<p>The unemployment rate crept up slightly from 5.19% in May to 5.24% in June. It is now at its highest level in 10 months.</p>
<p>The unemployment rate dropped in Perth, however saw a rise in Victoria, Queensland, South Australia and Tasmania.</p>
<p>To see the state by state breakdown, <a href="https://www.propertyobserver.com.au/images/2019/7/18/ABS%20Unemployment%20figures.jpg" target="_blank">click here</a>.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/18/ABS%20Unemployment%20figures.jpg" alt=""></p>
<p>There were forecasts from economists that there would be around another 9,000 jobs added, following on from the increase of 45,300 jobs in May. </p>
<p>There were only 500 jobs added.</p>
<p>Full time jobs rose by 21,100, but part-time jobs fell by 20,600.</p>
<p>The trend participation rate increased to 66 percent over the month.</p>
<p class="p2"><span>ABS Chief Economist Bruce Hockman said, "Australia's participation rate was at 66 per cent in June 2019, which means nearly two of every three people are currently participating in the labour market. "</span><br><br><span>"The participation rate for 15 to 64 year olds was even higher and closer to four out of every five people, " Hockman said.</span></p>
<p class="p2"><span>CommSec economist Ryan Felsman said the Reserve Bank is expected to hold for now.</span></p>
<p class="p2"><span>"The Reserve Bank is expected to ‘sit pat’ for now, assessing incoming economic data over the coming months before deciding the next move for the cash rate," Felsman said.</span></p>
<p class="p2"><span>"But the Board stands ready to act, “if needed” to support the economy and job market. </span></p>
<p class="p2"><span>"The end-of-month June quarter inflation data release is the next test."</span></p>
<p class="p2"><span> </span></p>
<p class="p2"><br> </p>
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wdavis-8cCN98p7xp

Unemployment rate meets forecasts and remains at 5.2%

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<p class="article-details">EXPERT OBSERVER</p>
<p class="article-details">The RBA cut the cash rate to 1% and signalled that they will continue to adjust monetary policy if needed.</p>
<div>
<div>
<div>
<div>
<p>As we expected, the Reserve Bank Board lowered the cash rate by 25bps to 1.00% at its July meeting. The motivation for this move is very much focussed on the labour market as was clearly indicated by the Governor’s recent speech.</p>
<p>In the decision statement, he pointed out that employment growth has been strong, the labour force participation rate is at a record level, the vacancy rate remains high, and there are reports of skill shortages in some areas. On face value, this would not be consistent with a concern about the labour market. But the Governor is now clearly focussing on spare capacity in the labour market, and that is measured by the unemployment rate, the underemployment rate, and wages growth. He believes that the Australian economy should be making more progress in reducing spare capacity and therefore a lower cash rate is consistent with that belief.</p>
<p>As we highlighted in our report last week, it seems likely that the RBA growth and inflation forecasts for 2020 that will be released in the August Statement on Monetary Policy, which will follow the August Board meeting, will be unchanged from the May forecasts of 2.75% for GDP growth and 2% for underlying inflation. This further emphasises the importance of the labour market in driving the policy response in June and July.</p>
<p>The critical final paragraph in the Governor’s Decision Statement leaves open the possibility of further stimulus. He notes that the Board “will continue to monitor developments in the labour market closely and adjust monetary policy if needed”. However, the degree of urgency that was certainly detected in the Governor’s recent speech and the June Board minutes appears to have eased. Consequently we remain comfortable with our view that there will be no follow up move in August.</p>
<p>Readers will be aware that Westpac was the first forecaster in the Bloomberg survey to call the cash rate below 1% (May 24). We predicted a final cash rate move to 0.75% by November, but highlighted that there were downside risks to 0.75%. Last week, we also noted that with the likely decision to cut in July, these downside risks had intensified. For now, we remain comfortable with our forecast that the next rate cut will occur in November, by which time the growth, inflation and labour market environment will not have improved sufficiently to satisfy the RBA. Indeed, by the November Statement on Monetary Policy, we expect that the RBA will have to lower its growth and inflation forecasts and raise its unemployment forecast for 2020, requiring a further policy response.</p>
<p>Critical issues between now and November will be evidence around the path of the unemployment rate, and the impact of this recent movement in the cash rate on financial conditions and the profile of the Australian dollar. The task of lowering the Australian dollar has recently been impacted by headwinds associated with general rate cuts by other major central banks around the world. However, without the RBA cuts, the Australian dollar may well have unhelpfully lifted.</p>
<p>As we noted last week, the intense focus on the labour market - where monthly updates are available - changes the historic pattern of policy adjustments. This has been exemplified in the June and July movements, and means that every month, certainly out to the end of 2019, will be live for policy. Issues that will also provide the RBA with reasons for caution will be around fiscal policy developments, particularly implications for household disposable income; the response of the housing market to the two rate cuts; and whether the consumer responds to tax cuts and lower rates with a robust spending appetite over the course of the second half of 2019.</p>
<p><strong>Conclusion</strong></p>
<p>When Westpac originally forecast two rate cuts in 2019 back in February, markets were only positioned for one cut by March 2020 and most major forecasters were still calling rates higher or on hold. We are therefore pleased to see that the forecast has proved to be correct. We were also the first forecaster to nominate a terminal cash rate lower than 1% (May 24), and that outlook has now been embraced by the market and most other forecasters. However with policy now in play at every Board meeting between now and the end of the year, uncertainties around specific timing are inevitable.</p>
<p>Our current view of one more cut this year by November has downside risks for potentially two, and developments over the next few months will determine that outcome. If the RBA were to lower the cash rate to 0.5% and still be dissatisfied with the excess spare capacity in the labour market then we expect that they will consider putting pressure on governments to loosen fiscal policy, as well as exploring other alternative policies that the RBA itself can embrace.</p>
<p><em>BILL EVANS is the Chief Economist at Westpac</em></p>
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bevans-rYk9SxEa4r

July RBA cut was primarily for the labour market: Westpac's Bill Evans

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<p>The RBA Governor Philip Lowe has said the labour market is key to the three key objectives that the RBA has held for the last six decades.</p>
<p>Speaking at the Committee for Economic Development of Australia (CEDA) event, Lowe cited the three broad monetary policy objectives when the Reserver Bank Act was passed 60 years ago.</p>
<p>They were the stability of the currency, the maintenance of full employment and the economic prosperity and welfare of the Australian people.</p>
<p>"These objectives have remained unchanged since 1959," Lowe said.</p>
<p>He said that where other nation's will have focused solely on inflation, Australia have had a three aim approach.</p>
<p>He added however that from operational perspective the flexible inflation target is the centre piece of the monetary policy framework.</p>
<p>"The target – which has been agreed to with successive governments – is to deliver an average rate of inflation over time of 2–3 per cent.</p>
<p>"Our focus is on the average and on the medium term."</p>
<p>Lowe said it was obvious to see the labour markets connection with the second objective, full employment, however it was important in the other two objectives.</p>
<p><span>"Trends in the labour market have a major bearing on inflation outcomes, so they are important for the first element of our mandate [the stability of our currency] as well.</span></p>
<p>"The labour market is, of course, also central to the third objective in our mandate – our collective welfare," Lowe said.</p>
<p>"It is stating the obvious to say that for many Australians, having a good job at a decent rate of pay is central to their economic prosperity. </p>
<p>"The RBA is seeking to achieve the lowest rate of unemployment that can be sustained without inflation becoming an issue.</p>
<p>Lowe suggests there is still spare capacity in the labour market.</p>
<p>"Over recent times there has been a gradual accumulation of evidence which has led to lower estimates," Lowe said.</p>
<p>"While it is not possible to pin the number down exactly, the evidence is consistent with an estimate below five percent, perhaps around four and a half percent.</p>
<p>"Given that the current unemployment rate is 5.2 per cent, this suggests that there is still spare capacity in our labour market.</p>
<p>In the 1960s, less than one in ten workers worked part time (below). Today is it one in three.</p>
<div class="image-graph"><img src="https://www.rba.gov.au/speeches/2019/images/sp-gov-2019-06-20-graph1.gif" alt="Graph 1: Part-time Workers"></div>
<div class="image-graph">Around three million people work part time because they want to, not because they can't find a full-time job, according to the ABS.</div>
<div class="image-graph"> </div>
<div class="image-graph">"Most people who are working part time do so because they are studying or have caring responsibilities, or for other personal reasons," Lowe noted.</div>
<div class="image-graph"> </div>
<div class="image-graph">"So we should not think of part-time jobs as being <cite>bad</cite> jobs, and full-time jobs as being <cite>good</cite> jobs."</div>
<div class="image-graph"> </div>
<div class="image-graph">On the cash rate cut, Lowe said the decision was not in response to a deterioration in the economic outlook since the previous update was published in early May.</div>
<div class="image-graph"> </div>
<div class="image-graph">"Rather, it reflected a judgement that we could do better than the path we looked to be on."</div>
<div class="image-graph"> </div>
<div class="image-graph">To read Philip Lowe's full speech at CEDA, <a href="https://www.rba.gov.au/speeches/2019/sp-gov-2019-06-20" target="_blank">click here</a>.</div>
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jrobinson-rf4aSBido9

The labour market is fundamental to the RBA's three key objectives: RBA Governor Philip Lowe

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<p>EXPERT OBSERVATION </p>
<p>The minutes of the April monetary policy meeting of the Reserve Bank Board have provided the clearest signal yet that the Bank would be prepared to cut the cash rate.</p>
<p>Firstly, the final section “Considerations for Monetary Policy” states “a lower level of interest rates could still be expected to support the economy through a depreciation of the exchange rate and via reducing required interest payments on borrowing, freeing up cash for other expenditure”.</p>
<p>The Board even sets out the conditions for a rate cut, “members also discussed the scenario where inflation did not move any higher and unemployment trended up, noting that a decrease in the cash rate would likely be appropriate in these circumstances”.</p>
<p>Recently the latest quarterly breakdown of employment by industry printed for the year to February.</p>
<p>We have considered this industry breakdown to try to find some insights into the RBA’s “tension” between the GDP and Employment Reports.</p>
<p>For a start it is reasonable to separate out the employment data into “cyclical” and “non-cyclical” sectors.</p>
<p>We have looked at “non-cyclical” covering: public administration; education and training; health care; and utilities.</p>
<p>Cyclical sectors are considered to be the other thirteen including: construction; manufacturing; retail and wholesale trade; accommodation; transport; finance; mining; real estate; recreation; and media.</p>
<p>The “non-cyclical “group has increased as a proportion of total employment from 27.9% in February 2008 to 31.9% in February 2019. That 4% increase in share represents 510,000 jobs in today’s workforce.</p>
<p>The cyclical group has fallen as a proportion of the workforce from 64.6% in February 2008 to 59.4% in February 2019.</p>
<p>It is important to note that “public administration” has increased by 18% over the last year but we assess that a considerable part of that increase has been due to reclassification of health and education workers from “private” to “public”.</p>
<p>Because we are including public; education; and health in the noncyclical category the reclassification does not distort the results.</p>
<p>Finally we have one remaining category – “professional services”.</p>
<p>This group represents 8.7% of total employment covering: management consulting; computer system design; accounting services; legal services; and engineers.</p>
<p>This category represents 8.7% of total employment having increased from 7.4% in February 2008.</p>
<p>Consider Table 1 to assess whether there has been any evidence of the impact of the slowdown in growth in the economy on employment.</p>
<p>The table uses the six month annualised growth rate for jobs in the three categories (using a two quarter average to smooth the series).</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/4/19/New%20Project%207.jpg" alt=""></p>
<p>The following observations are relevant:</p>
<ul>
<li>As noted by the RBA, overall momentum in the jobs market has held fairly steady over the last 18 months despite the slowdown in economic growth (2.6% in the six months to February 2018 to 2.2% in the last six months).</li>
<li>However, momentum in the “cyclical” sectors has slowed markedly from 2.9% in the six months to February 2018 to –0.4% in the six months to February 2019.</li>
<li>Momentum in the “non-cyclical” sectors has lifted considerably from 1.5% to 5.6% over the same period.</li>
<li>The professional services sector has been booming. So the “puzzle” about the labour market is not as opaque as might be expected.</li>
</ul>
<p>Non-cyclical jobs (dominated by government) have been strong and this sector is increasing as a proportion of total employment.</p>
<p>Cyclical sectors are slowing markedly and are falling as a proportion of total employment.</p>
<p>Given the lags and the cautious outlook for growth, employment in these sectors is likely to continue to slow.</p>
<p>It is not clear whether the “professional services” sector best fits in the cyclical or the non-cyclical categories.</p>
<p>Certainly, strong government spending in the infrastructure space is likely to explain a considerable part of the success of this category; the sharp lift in government regulations is also supporting this sector.</p>
<p>Furthermore, there is also likely to be a structural element to the success of this sector as companies embrace technology to boost productivity and substitute labour.</p>
<p><strong>Conclusion</strong></p>
<p>The Board of the RBA has nominated the labour market as the key for the policy outlook.</p>
<p>We are disappointed that ongoing low inflation and the persistent need to lower growth forecasts seems to be out-weighed by the employment “story”.</p>
<p>Our analysis points to a marked slowdown in jobs growth already being well underway in the cyclical sectors of the economy.</p>
<p>We expect that eventual recognition of these facts will keep the RBA on track for our expected first rate cut in August.</p>
<p><em><strong>Bill Evans</strong> is Chief Economist at Westpac.</em></p>
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Cyclical jobs are slowing, complicating the RBA’s employment puzzle: Bill Evans

The state of the labour market: Guy Debelle, RBA deputy governor

<html><body>
<p>EXPERT OBSERVER</p>
<p>As expected, the Board of the Reserve Bank decided to leave the cash rate unchanged at 1.50%.<br><br>There were very few changes in the Governor’s statement from the statement on August 7.</p>
<p>The Governor confirmed the central growth forecast for GDP growth to average “a bit above 3 per cent” in 2018 and 2019. Positive business conditions were noted but once again, “one continuing source of uncertainty is the outlook for household consumption”.</p>
<p>The rhetoric around the labour market was a little more upbeat. The unemployment rate at 5.3% was described as “the lowest level in almost six years”. Reports of skill shortages were noted and while wages growth was described as quite low, “it has picked up a little recently”. However despite that more positive assessment, the forecast for the unemployment rate remains unchanged to settle at 5 per cent “over the next couple of years”.</p>
<p>Since the last Board meeting, the Australian dollar had fallen from around USD 74.40 to USD 71.90. Furthermore, the Trade Weighted Index (TWI) had fallen from 63.5 to 61.8 (down 2.6%). This unusually large move prompted extra commentary on the AUD. It is still described as remaining within the two year range, but “it has depreciated against the USD along with most other currencies”. The move against the USD is around 3.3% compared to 2.6% for the TWI. It is a little surprising that the commentary seems to attribute all the weakness in the AUD to USD strength.</p>
<p>Since the August Board meeting, Westpac has increased its standard variable mortgage rate by fourteen basis points. It is interesting that the Governor continues to describe rates as “some lenders have increased mortgage rates by small amounts”.</p>
<p>The commentary around the housing market is unchanged with Sydney and Melbourne markets continuing to ease and housing credit growth declining to an annual rate of 5 ½ per cent.</p>
<p>The closing paragraph in the Governor’s statement is unchanged with the key commentary “further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual”.</p>
<p><strong>Conclusion</strong></p>
<p>Since the last Board meeting, Westpac extended its public forecasts to 2020. We expect the RBA to keep the cash rate on hold over the extended period. It is our view that the global economy, where growth appears to have peaked in 2017, will be slowing through 2020, particularly as the US economy slows under the weight of  further rate increases from the Federal Reserve and a curtailment of the fiscal stimulus..</p>
<p>The normal RBA policy of raising the cash rate at a time of strong global growth has been replaced in this cycle with other ways to tighten financial conditions. These have included macroprudential policies around banks’ mortgage books, and the rise in wholesale funding costs which has impacted the borrowing costs of banks, corporates, and in some cases, households.</p>
<p><em>BILL EVANS</em><em> is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em> </p>
<p> </p>
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