The Australian Bureau of Statistics (ABS) released its quarterly employment data which shows the slowdown in mining employment but a large ramp-up in real estate employment.

The Australian Bureau of Statistics (ABS) released its quarterly employment data which shows the slowdown in mining employment but a large ramp-up in real estate employment.

According to the ABS, total employment in August 2014 (seasonally adjusted) was recorded at 11.665 million persons nationally. Despite the fact that the unemployment rate has increased from 5.8% a year ago to 6.1% currently, total employment has increased by 252,519 persons or by 2.2%. The 2.2% annual rise in employed persons is the largest increase since the 12 months to April 2011.

Each quarter the ABS publishes detailed employment statistics which show some very interesting trends which highlight the current state of the labour market across different Australian industries.

The industries that have recorded the greatest increase in employment over the past year were: agriculture forestry and fishing (16.4%), rental hiring and real estate services (11.3%), information media and telecommunications (10.5%), education and training (7.7%) and retail trade (5.7%). On the other hand, the largest falls in employment over the year were recorded in: mining (-11.0%), public administration and safety (-7.6%), electricity, gas, water and waste services (-4.6%), administrative support services (-3.4%) and wholesale trade (-1.2%).

In terms of the industries which employ the most Australians, these industries are: health care and social services (12.2%), retail trade (10.8%), construction (9.0%) and scientific and technical services and education and training (both 8.0%).

When we pair this employment data we get a clearer picture of the industries which are doing the heavy lifting. Mining is the biggest contributor to overall GDP at 10.7% however, it directly employs just 2.0% of the workforce. It is reasonable to assume that indirect employment from the mining sector is much higher. Financial and insurance services are the second largest contributor to GDP (8.3%) however, that sector employs just 3.6% of total employees. If we look at things the other way, health care and social assistance (12.2%) and retail trade (10.8%) are the two biggest industries of employment however, they contribute 6.5% and 4.4% respectively to total GDP.

 

 

It appears that the industries doing the heaviest lifting in an economic sense, actually require comparatively fewer employees. The Reserve Bank (RBA) has previously stated that as the economy transitions away from mining investment, construction is the industry they are looking to, to fill the gap. The reason for this is clear, construction is one of the few industries that contributes significantly to GDP and employs a substantial number of people. In June, construction was the third largest industry contributor to GDP and was also the third largest industry of employment in August. There is also a flow-on employment from construction. When new buildings are built, they need to be financed and insured, they need to be furnished, they need to connect with information and telecommunication services, they require real estate services and they need electricity gas and water.

Additionally, the strong housing sector has seen the number real estate related jobs increase substantially over the past year. Employment in rental hiring and real estate services increased by 21,800 persons or 11.3% over the past year. As home values rise, demand (and subsequently employment opportunities) for real estate services increase however, rental hiring and real estate services account for very small proportion of total employment at just 1.8%. It’s also important to remember that employment in this sector is very much market driven, when sales transactions fall so too do employment opportunities.

The construction sector is clearly the only industry large enough in terms of output and employment to pick up the slack as mining slows. To date the handover hasn’t been without its hurdles but there has been a significant lift in residential construction. As iron ore prices fall, the speed at which this transition needs to occur may accelerate. Although business confidence is improving, consumer sentiment remains low, retail trade is slowing and real wages are now falling. Completing the handover from mining to construction over the next few years does not look as if it will be an easy accomplishment.