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Australia's coming jobs boom; A boom in in a sector which is one of our largest employers is going to create a lot of jobs.
Topic Started: 5 Aug 2014, 09:54 AM (8,985 Views)
skamy
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ADAM CARR 1 HOUR AGO 2
INDUSTRIES CONSTRUCTION AND ENGINEERING RESOURCES AND ENERGY ECONOMY AUSTRALIAN NEWS
We haven’t had a bad year so far in terms of jobs growth. Total jobs are up 110,000 with most of that, 94,000, full-time. That’s not to say that this is strong growth or anything, but it is an above-average clip -- and a good deal better than some of the more alarmist commentary out there would have us believe. Consistent with our above-trend pace of growth I guess. At this rate we’ll be looking at more than 200,000 jobs created for the year.

As positive as that all is, chances are we’re only seeing the tip of the iceberg at this point. I realise this isn’t a common view. The consensus regards the labour market as weak, although this quite clearly isn’t the case using the more respected employment metrics over time. Even some of those who acknowledge recent momentum suggest it can’t last because of this fearful obsession with the ‘end of the mining boom’.

A few things to note there though. Firstly, the mining boom didn’t add very much to jobs growth in the first place. Think about when the investment boom really took off: late 2010 through 2011. Over that time, jobs growth averaged just over 10,000 per month, well below trend; the participation rate dropped 0.4 per cent; and the unemployment rate did nothing. There was no noticeable effect. Why, then, would anyone expect jobs growth to moderate and the unemployment rate to shoot up now?

Not that the mining boom has ended or anything, but you get the point. No one should expect any detrimental impact when it does end, because the fact is, the mining sector isn’t a big employer! Sure, mining employment shot up 40 per cent during the boom -- but the reason that didn’t show up in the broader employment statistics (average monthly growth of only 11,000 though that period) is because the mining sector only accounts for about 1-2 per cent of the labour market.

Now think of what’s happening in the rest of the economy. In particular, think about the impending residential construction boom. The latest national accounts suggest this boom is well under way, with investment surging over 6 per cent in the March quarter. On top of that, dwelling commencements are up over 22 per cent compared to last year and so, notwithstanding recent softness in the building approvals figures, all the indications are that we should see residential construction continue to surge this year. At least 10 per cent and probably more -- and what with the severe shortage of housing stock currently, there is no reason why we shouldn’t see that again next year.

The good news for Australia is that the construction sector is a big employer. Construction directly employees over 1 million people, or near 10 per cent of the labour market. A good chunk of that is involved in residential construction -- more than half probably (although just on the Australian Bureau of Statistics figures it’s hard to get an exact estimate).

A boom in in a sector which is one of our largest employers is going to create a lot of jobs. It’s anyone’s guess as to how many, obviously, and I’m sure cone heads throughout the country are madly running their regressions to see what they can come up with. The last major statistical study done by the ABS was about 12 years ago using data from 1996. Obviously that’s a bit dated -- but for interest, they came up with a result showing that for each $1 million spent on construction (a house or whatever else), nine jobs were created directly in the construction industry. Including multipliers (think estate agents, retail, teachers etc) that rose to 37 jobs. With inflation, that’d be lower, obviously -- something more like 20 jobs now. On current commencements and approvals data, that means you could get up to 100,000 jobs created this year -- just from the additional surge in housing construction.

This is all back-of-the-envelope stuff obviously, but you get the point. The end of the mining boom shouldn’t be expected to lead to any noticeable job losses. The upswing in residential construction however, should lead to quite noticeable job gains. It’s probably no coincidence that the construction sector accounts for a full one-third of all jobs created over the last six months, with strong gains also found in the services sectors -- which includes things like real estate, professional and technical services etc. Should business ever get off its backside and start investing, then things could really heat up. Non-mining investment is at recessionary levels. This has to turn at some point, and if that happens alongside the resi-construction boom, then jobs growth could be truly phenomenal.

http://www.businessspectator.com.au/article/2014/8/5/australian-news/australias-coming-jobs-boom
Some very welcome news on the jobs front. This is pretty much the nail in the coffin for those who were hoping for dropping employment and people losing their homes as a solution to housing affordability.
Edited by skamy, 5 Aug 2014, 09:56 AM.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Jimbo
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skamy
5 Aug 2014, 09:54 AM
http://www.businessspectator.com.au/article/2014/8/5/australian-news/australias-coming-jobs-boom
Some very welcome news on the jobs front. This is pretty much the nail in the coffin for those who were hoping for dropping employment and people losing their homes as a solution to housing affordability.
This is happening in WA at the moment. Loads of houses being built. This is why the rental vacancy rate has been climbing. It really is cheaper to buy a house and land package in an outlying suburb on 400m2 than it is to rent.

The big impact of the mining construction downturn in WA, is the slowing rate of migration into WA.
This state has been a magnet for people from all over Australia with tales of $120k a year dishwashing jobs drawing them in like flies to shit. They won't come here to lay bricks for the same rate they can pull in Melbourne or London.
I don't expect WA employment to weaken much due to the mining slowdown because the main impact will be on interstate migration. We will lose a few jobs but we will also lose a few people as well.

The big impact of the low unemployment rate and big money mining projects in WA has been on wages. WA is a high wage economy and from my own experience, rates are falling. We take on boilernakers, sparkies and Engineers today at lower rates than a year ago. The high wage economy has pushed up the price of everything from a pint of beer to suburban 4x2. I expect the WA workforce to be earning a bit less on average over the coming years.

As for mining only employing a few percent of people, I would have to disagree with that one. The company I work for in Perth employs 100's and we have almost exclusively been making things for resources projects for the last 6 years. Our forward order book is very slack at the moment.

So if WA sees falling migration, fewer big paid FIFO jobs and an increase in residential construction, we will have fewer people with less money chasing more properties. 2+2=?
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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skamy
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The biggest positive for WA is that it did not see the same inflation in house prices as places like Darwin and Karratha. Rents are falling at the moment especially at the top end of the market for sure but the property market never did rise in fact it dropped during the height of the investment boom. This is why I believe Perth prices are very unlikely to drop any further from here.

There is so much residential construction on the books and as the article suggests growth in this area has much more positive economic outcomes than growth in mining investment.

My daughter and her pals are aware that they do not want to live the FIFO life for that long, they are using it as a stepping stone to save or to pay down their mortgages. It is a mistake to believe most people are fools with their money, particularly at this stage in the cycle when people are still careful after the fear of the GFC.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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SittingOnDeFence
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So the mining boom never existed?
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Lef-tee
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SittingOnDeFence
5 Aug 2014, 11:10 AM
So the mining boom never existed?
Not in skamy's special construct-your-own reality.
Quote:
 
No one should expect any detrimental impact when it does end, because the fact is, the mining sector isn’t a big employer!


True - but the argument ignores the difference between mining and a mining investment boom. So the enormous sums being pumped into the economy by an unprecedented mining investment boom have been simply evaporating without effect have they?

Quote:
 
A few things to note there though. Firstly, the mining boom didn’t add very much to jobs growth in the first place. Think about when the investment boom really took off: late 2010 through 2011. Over that time, jobs growth averaged just over 10,000 per month, well below trend; the participation rate dropped 0.4 per cent; and the unemployment rate did nothing. There was no noticeable effect. Why, then, would anyone expect jobs growth to moderate and the unemployment rate to shoot up now?


Interestingly, the particular part of the investment boom he refers to occurred at about the same time that one of our biggest economic drivers - the expansion of private sector credit - went flat. Carr appears to be attempting to frame the argument to give the impression that no offsetting factors came into play as investment boom part 2 ratcheted up. What mining investment was giving with one hand, the rollover in credit growth was probably taking away with the other. So what happens when that goes if nothing steps up to replace it?

Hopefully he is right and construction takes off to replace it.
Edited by Lef-tee, 5 Aug 2014, 01:43 PM.
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Count du Monet
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Quote:
 
This state has been a magnet for people from all over Australia with tales of $120k a year dishwashing jobs drawing them in like flies to shit.


Sucks them in every time. Like the Gold Rush, only a minority made good. :re:
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
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o2sd
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Article pretty much sums up the idiotic economic thinking that passes for policy in Australia today.

A few things about DFI hot money.
1. It improves the capital account, which offsets the trade deficit.
2. It temporarily pushes up wages for everyone close to the actual investment, not just those who are directly employed, and by extension, has a stimulatory effect on consumer spending.
3. It increases the output on existing assets i.e. it increases the productivity of mining assets.

Residential construction, on the other hand.
1. Worsens the trade deficit as many construction materials (tools, fixtures, fittings, glues etc) are now made in China and need to be imported. This can only be offset by relaxing foreign investment rules to attract the capital back into the economy via purchases of new dwellings.
2. Lowers overall labour productivity because construction is labour intensive, but construction itself does not make construction assets more productive, and construction booms push up the cost of construction labour.
3. Does not create productive assets like mines, but depreciating assets (houses), which creates future costs (maintenance,service) rather than future income.
4. Requires credit easing to stimulate, lowering interest income.

So while residential construction has a stimulatory effect on employment and spending, it is actually a drag on economic growth due to worsening trade deficits and declining productivity growth and income. In short, it is short term stimulus that will be paid for in the future with declining economic growth.

Sigh....
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newjez
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skamy
5 Aug 2014, 09:54 AM
ADAM CARR 1 HOUR AGO 2
INDUSTRIES CONSTRUCTION AND ENGINEERING RESOURCES AND ENERGY ECONOMY AUSTRALIAN NEWS
We haven’t had a bad year so far in terms of jobs growth. Total jobs are up 110,000 with most of that, 94,000, full-time. That’s not to say that this is strong growth or anything, but it is an above-average clip -- and a good deal better than some of the more alarmist commentary out there would have us believe. Consistent with our above-trend pace of growth I guess. At this rate we’ll be looking at more than 200,000 jobs created for the year.

As positive as that all is, chances are we’re only seeing the tip of the iceberg at this point. I realise this isn’t a common view. The consensus regards the labour market as weak, although this quite clearly isn’t the case using the more respected employment metrics over time. Even some of those who acknowledge recent momentum suggest it can’t last because of this fearful obsession with the ‘end of the mining boom’.

A few things to note there though. Firstly, the mining boom didn’t add very much to jobs growth in the first place. Think about when the investment boom really took off: late 2010 through 2011. Over that time, jobs growth averaged just over 10,000 per month, well below trend; the participation rate dropped 0.4 per cent; and the unemployment rate did nothing. There was no noticeable effect. Why, then, would anyone expect jobs growth to moderate and the unemployment rate to shoot up now?

Not that the mining boom has ended or anything, but you get the point. No one should expect any detrimental impact when it does end, because the fact is, the mining sector isn’t a big employer! Sure, mining employment shot up 40 per cent during the boom -- but the reason that didn’t show up in the broader employment statistics (average monthly growth of only 11,000 though that period) is because the mining sector only accounts for about 1-2 per cent of the labour market.

Now think of what’s happening in the rest of the economy. In particular, think about the impending residential construction boom. The latest national accounts suggest this boom is well under way, with investment surging over 6 per cent in the March quarter. On top of that, dwelling commencements are up over 22 per cent compared to last year and so, notwithstanding recent softness in the building approvals figures, all the indications are that we should see residential construction continue to surge this year. At least 10 per cent and probably more -- and what with the severe shortage of housing stock currently, there is no reason why we shouldn’t see that again next year.

The good news for Australia is that the construction sector is a big employer. Construction directly employees over 1 million people, or near 10 per cent of the labour market. A good chunk of that is involved in residential construction -- more than half probably (although just on the Australian Bureau of Statistics figures it’s hard to get an exact estimate).

A boom in in a sector which is one of our largest employers is going to create a lot of jobs. It’s anyone’s guess as to how many, obviously, and I’m sure cone heads throughout the country are madly running their regressions to see what they can come up with. The last major statistical study done by the ABS was about 12 years ago using data from 1996. Obviously that’s a bit dated -- but for interest, they came up with a result showing that for each $1 million spent on construction (a house or whatever else), nine jobs were created directly in the construction industry. Including multipliers (think estate agents, retail, teachers etc) that rose to 37 jobs. With inflation, that’d be lower, obviously -- something more like 20 jobs now. On current commencements and approvals data, that means you could get up to 100,000 jobs created this year -- just from the additional surge in housing construction.

This is all back-of-the-envelope stuff obviously, but you get the point. The end of the mining boom shouldn’t be expected to lead to any noticeable job losses. The upswing in residential construction however, should lead to quite noticeable job gains. It’s probably no coincidence that the construction sector accounts for a full one-third of all jobs created over the last six months, with strong gains also found in the services sectors -- which includes things like real estate, professional and technical services etc. Should business ever get off its backside and start investing, then things could really heat up. Non-mining investment is at recessionary levels. This has to turn at some point, and if that happens alongside the resi-construction boom, then jobs growth could be truly phenomenal.

http://www.businessspectator.com.au/article/2014/8/5/australian-news/australias-coming-jobs-boom
Some very welcome news on the jobs front. This is pretty much the nail in the coffin for those who were hoping for dropping employment and people losing their homes as a solution to housing affordability.
I'm sure father Xmas and the easter bunny will be true too if you really want them to be. Now, calm down and have this nice cup of tea. Everything's going to be alright.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Elastic
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Given that construction is nearly at 200,000 dwellings per year at the moment and population growth is 440,000 a year I don't see a lot of potential for construction to increase further.
He speaks of a housing shortage, but apart from Sydney where stock on market is very low, there is nothing to suggest that a housing shortage exists. So I don't see how housing construction can accelerate, except in Sydney, so its contribution to employment will be stable.
In Perth, the construction boom is already in full swing and is only likely to deteriorate from here as vacancy rates surge and rents fall.
Only a rat can win a rat race.

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Perthite
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In in in Perth?
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