Economic Update March 2020 - SUPPORTING THE SOUTH AUSTRALIAN BUILDING AND CONSTRUCTION INDUSTRY AND WORKFORCE - CITB
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
SUPPORTING THE SOUTH AUSTRALIAN
BUILDING AND CONSTRUCTION
INDUSTRY AND WORKFORCE.
Economic Update
March 2020
Disclaimer Note: these reports will be updated each month, reflecting data and analysis that was released in that month. Note that this data may in fact relate to activity some months prior depending on the data collection methodology and timing. This publication has been produced for general information only and is not intended to constitute advice. Readers relying on the content of the publication do so entirely at their own risk. No warranty (express or implied) is given as to the accuracy or completeness of information provided. The information may be true and correct at the date of publication but this may change after publication. CITB is not responsible for providing updates on such information. All projections and forecasts are based on assumptions. These assumptions may not hold true and therefore such projections and forecasts cannot be relied upon. CITB is not responsible for providing updates on such projections and forecasts cannot be relied upon. CITB is not responsible for providing updates on such projections and forecasts. All statements of opinion by CITB represent the subjective views of CITB and CITB gives no warranty that such statements are correct. The publication may include statements of opinion by third parties which do not necessarily reflect the opinion of CITB. All links to third party websites and references to third parties are included for convenience only and do not constitute endorsement of the material on those sites, or endorsement of the relevant third parties and their product or service. Readers should make their own assessment of all information provided (including statements of opinion and projections and forecasts) and consider obtaining independent professional advice before making any decisions based on such information. In no event is CITB (or its trustees, officers, employees or any related body corporate) liable for any liability, loss, risk or damage (including incidental or consequential damages) incurred or suffered (directly or indirectly) out of the use of any information contained in this publication, whether based on contract, tort or other legal action. Copyright in the publication belongs or is licensed to CITB and no part of this publication may be used, reproduced or copied without CITB’s consent. Please refer all queries in respect of this publication to Eric Parnis, CITB Manager Research, (08) 8172 9509, ericp@citb.org.au. Published 6 April 2020 Contact: citb@citb.org.au | (08) 7089 5739 78 Richmond Road, Keswick SA 5035
Contents OVERVIEW Positive Indicators 01 Negative Indicators 01 IMPACT ON THE ECONOMY AND COMMSEC — Economic Insights COVID-19: Making ON BUILDING AND CONSTRUCTION OF sense of the economic impact, 30 March 2020 02 COVID-19 — SUMMARY OF REPORTS Deloitte Business Outlook March Quarter 2020 (national data only) 02 Cordell Construction Monthly, March 2020 03 Deloitte Weekly Wrap (March 25) 03 Core Logic 03 McKell Logic 03 Grattan Institute 03 Goldman Sachs 04 Sourceable 04 Property Council 04 ANZ Research — Blue Lens, 17 March 2020 04 Westpac Bulletin, 18 March 2020 05 SUMMARY OF THE POLICY RESPONSES The Guardian 31 March 2020 05 AUSTRALIAN AND SOUTH AUSTRALIAN GOVERNMENTS AS AT 31 MARCH 2020 BUILDING AND CONSTRUCTION Summary of ABS Indicators 06 INDICATORS ABS Building Approvals — February 2020 06 Other Commentary on Building and Construction Indicators 07 Australian Securities and Investments Commission — Companies Entering External Administration by Industry 07 Savills Research — Quarter Time National Office, Q4/2019 08 Savills Research — Quarter Time National Retail, Q4/2019 08 Cordell Construction Monthly, March 2020 09 EMPLOYMENT AND UNEMPLOYMENT ABS Labour Force — February 2020, Cat. No. 6202.0 09 ABS Labour Force Australia Employment by Industry, February quarter 2020 10 Vacancy Report — February 2020, Australian Government 11 South Australian Centre for Economic Studies (SACES) Data Wrap 20 March 2020 11 POPULATION ABS Australian Demographic Statistics, Cat. No. 3101.0 11 COMMENTARY ON GENERAL ABS Retail Trade — January 2020, ABS Cat. No. 8501.0 12 ECONOMIC CONDITIONS Savills Research — Quarter Time National Office, (VARIOUS ANALYSIS) Q4/2019 12
Overview
• Since the February update, the world has been in the midst
of the COVID-19 pandemic, which aside from being a health
emergency, has also led to significant economic upheaval.
Unfortunately published economic data is backward looking
and in many cases relates to conditions at the end of 2019.
• Therefore it will take at least a few months to get accurate
data on the impact of the virus on the broader economy
and building and construction in particular; and on how
economic stimulus measures are helping to provide a buffer.
• What is clear is that even before the pandemic,
conditions in South Australia’s economy and building
and construction sector were quite soft. For example,
building approvals are trending downwards for both
residential and non-residential and pre COVID-19 forecasts
suggest a continuation of subdued conditions.
Positive Indicators
• Economic stimulus measures from the Australian and
South Australian Governments in response to COVID-19
provide some support for employers of apprentices
and the bringing forward of infrastructure projects.
• Population growth (as at the September quarter 2019)
showed a relatively strong result for South Australia.
However, the travel restrictions likely for much of 2020 are
likely to significantly limit net overseas migration gains.
Negative Indicators
• Like many other sectors, the building and
construction sector is likely to be adversely affected
by the economic impact of COVID-19.
• Employment fell in South Australia in the year to February
2020, even before the impact of COVID-19.
• Most indicators of building and construction activity were
already trending down in South Australia prior to March.
1
Impact on the Economy and on Building and
Construction of COVID-19 — Summary of Reports
Note: these reports have been prepared at various stages in the Deloitte Business Outlook March Quarter 2020
past few weeks, and most prior to the Australian Government’s (national data only)
Jobs Keeper funding package.
• Residential construction was experiencing a pretty nasty
cyclical downturn through 2019 and early 2020, which could
CommSec - Economic Insights COVID-19: Making now turn into a freefall as coronavirus wreaks havoc with
sense of the economic impact, 30 March 2020 particular types of projects. With the outlook for residential
property prices suddenly much more uncertain, the incentive
• At this stage, clearly it is near impossible to make accurate
for additional building activity is very low. Building construction
predictions. Much depends on how quickly the number of
is also heavily reliant on equipment and materials, meaning
COVID-19 cases can be controlled. Also much depends on how
that supply chain disruptions are another area for concern.
quickly treatments and a vaccine can be found for the virus.
• The incredibly uncertain environment could put a halt to
• These are extraordinary times with no exact precedent.
current large scale projects and delay future ones. With
· The best approach to forecasting is shown by the
building approvals already low, and unlikely to improve
International Monetary Fund, expressing in general
anytime soon, there won’t be any improvement this year.
terms the likelihood of a global recession in 2020
but not speculating on the size of the fall. • Commercial construction has been a different story to
residential, with growth in many of its major sectors. But
• Australia is also at risk of recession. But it is important
commercial construction is very reliant on discretionary
to note that the Reserve Bank and Federal, State
decisions with respect to its timing. If management and
and Territory governments are providing massive
boards are fearful, and if credit is hard to come by, that says
support for the economy and financial markets.
commercial construction will undergo a notable downturn.
• The economic impact of COVID-19 is also quite variable across The probability of major construction projects being
businesses and sectors. Travel, recreation and hospitality greenlight in the near future remains low, as businesses
businesses have been most affected. But supermarkets, reassess the viability of current and future projects.
electrical goods stores, some transport businesses and
• Engineering construction comprises a large part of the
sporting goods retailers have noted firmer demand. And
overall construction market with mixed performance
infrastructure construction has been little affected.
recently. Private sector investment has been falling
• Notably, in past recessions caused by an external shock as large and long-term LNG projects wrap up the
(such as 1975 due to the oil price shock), the Australian construction phase and move to production. Offsetting
economy has bounced back quickly. But again, much this has been the large-scale public sector investment,
depends on how quickly the virus can be contained. mostly into long-term transport infrastructure.
• In the current period, the national jobless rate stands • The incredibly high uncertainty permeating through the
at a near 8-year low of 5.1 per cent. As the downturn economy does not bode well for engineering construction,
has been caused by an external ‘shock’ the jobless rate particularly private sector construction which is generally
will likely rise more quickly. A raft of retail, hospitality, more responsive to worsening economic conditions.
arts and recreation staff have been stood down. While the public sector pipeline remains large, a key
question is the extent to which state governments are
• However, job creation is occurring in supermarkets,
willing to speed up the pipeline of their works.
grocery stores, some health businesses
and delivery/courier businesses.
Chart 1: Construction Output and GDP (national data)
• While unemployment will likely lift quickly to record levels, the Construction (change on year earlier)
government has lifted cash payments to prevent broader job
losses. It is anticipated that jobless rates will fall quickly when
the virus is contained and businesses are allowed to re-open.
SOURCE: DELOITTE ACCESS ECONOMICS
2Cordell Construction Monthly, March 2020 • Neither Australia nor the world has ever before dealt with
a problem that gets four times worse every week, so
• The non-residential sector has a mixed degree of exposure to speed of action is vital – especially in health preparedness,
the economic fallout related to coronavirus. With job losses with a decision taken today four times as effective as
expected to surpass 800,000 individuals and unemployment the exact same decision taken in a week’s time.
likely to rise to around 11% by June, we could see a negative
impact on sectors of commercial real estate, especially
in those segments hard hit by the virus, which include Core Logic
hospitality, education, tourism and some sectors of retail.
• The largest and most direct industry shocks
• Additionally, with many businesses moving to a work from home from the coronavirus are expected in:
arrangement, office vacancies are likely to temporarily soar.
• tourism, where increasingly strict quarantine
• It’s not all bad news for commercial real estate and procedures deter travel;
the peripheral industries. There have been reports of
• education, due to fewer foreign students being able to travel;
strong retail sales for bulky items such as computer and
electronic equipment, office furniture and white goods. • hospitality, where social distancing leads to a
decline in café, bar and restaurant visitation;
• Additionally, with an expected surge in hope
shopping and delivery services, the warehousing • retail, which will be dragged down by low
sector is likely to see a rise in demand. consumer confidence levels; and,
• arts and recreation, where visitation to theatres , cinemas and
• Additionally, healthcare and medical sectors are already
art galleries are already on the decline.
under strain and likely to remain in high demand.
Unlike the global financial crisis, where a mining boom, as well as
monetary and fiscal policy were effective in helping Australia avoid
Deloitte - Weekly Wrap – 25 March 2020 recession, the domestic economy now faces new challenges:
• The world is clearly in new territory in responding
to the global pandemic of COVID-19. Dr Ira Kalish,
McKell Institute - Initial assessment of the impact of a
Deloitte’s Chief Global Economist notes:
COVID-19 induced economic downturn on NSW and
• “The number of COVID-19 cases has soared outside of China Australian workers
and will likely do so again in the coming weeks. The result
has been a different global economy. Economic activity • 3.7 million working Australians have no access to paid leave.
is declining rapidly. Consumers are staying at home and • 1.86 million workers in Australia are employed in five sectors
businesses are shutting their doors. Unemployment is rising immediately impacted by the downturn: accommodation
sharply, key industries face massive disruption and likely and food services, retail trades (excl. food retailing), creative
bankruptcies, and central banks have cut interest rates and and performing arts, sports and recreation, and airlines.
injected liquidity on a scale rarely seen before. Asset and While workers in these fields are immediately impacted,
commodity prices have fallen sharply. Risk spreads have the economic ramifications will be felt economy wide.
increased, threatening to cause credit markets to seize up”.
• 57.8 per cent of workers in industries identified
• In Australia, our normal way of life is changing rapidly with as most immediately impacted are female.
the forced closure of all places of social gathering, and it is
likely that even more restrictive measures are still to come. • There is a risk that the unemployed in the 55-64 year bracket
will be forced into early retirement should job searches
• The short-term economic impact will be profound. We will extend for durations greater than those evident during the
get confirmation in the coming weeks of the scale of distress, GFC. It is important that Governments consider methods
but the overwhelming demand we saw for Centrelink services of incentivising employers to retain these workers
earlier this week tells the story of where this is heading.
• But, as unprecedented as the size and speed of the response Grattan Institute
to date from the authorities has been, it isn’t enough: numbers
of people with the virus mounting by a factor of four times • No matter how much money governments throw at the
every week, and business and job stress further building economy, most businesses cannot survive the absence
by the day. So, this is still far from the end of the story in of normal activity for more than a few months.
terms of federal government support. Measures to date • It is not just tourism and hospitality. Companies small
have focused on smaller business, but jobs at our well-run, and large across sectors from household services to
larger businesses are also at risk. These jobs are equally manufacturing to construction, are developing and
important, not least because larger organisations, if they executing plans to sack hundreds of thousands of people.
remain somewhat intact, will be better placed to turbo-charge
the economic recovery once the virus passes. • Unemployment will soar, probably driving a sharp fall
in house prices, causing big problems for banks.
3Goldman Sachs • On consumer spending, Hunter sees
a ‘very big negative shock’.
• Given the rapid deterioration in the Australian economic
outlook as the coronavirus causes the closure of • More encouragingly, Hunter says prospects are brighter
borders and restrictions on movement, Goldman Sachs toward the latter half of the year and into 2021.
Group Inc. now forecast the sharpest annual GDP
• Worldwide, she says infections are expected to
contraction since the great depression of the 1920s.
peak at around May to June – albeit with Australia
• The Australian economy will shrink 6% in 2020 versus facing greater difficulty as winter approaches.
last year, economists led by Andrew Boak wrote in a
• With that in mind, Hunter says the economy is likely to return to
report dated March 20, 2020. Most of the contraction is
very subdued levels of growth in the third quarter followed
expected to be driven by a collapse in ‘social’ consumption,
by quarterly year-on-year growth rates of five percent or
with an assumption that spending at hotels, cafes and
greater in the final quarter and extending into early 2021.
restaurants will fall more than half, while spending on many
discretionary categories will drop by up to one third. This will be supported by government efforts worldwide
to restart economic momentum. “We are going into the
• As the economy contracts, unemployment will rise to
worst in terms of disruption and dislocation,” Hunter said.
8.5%, the Goldman economists estimate, from 5.1% in
“But we will come out the other side we would expect
February. The possibility that some workers leave the
by the end of this year and things will get better.”
labour market while some businesses cut back hours, but
retain staff, make the jobless rate tough to estimate.
Property Council
Sourceable • At this stage, we anticipate that economic activity will
recover in the second half of the year and that the rise in
A recession in Australia during the first half of this
new cases will peak before the end of June. Obviously,
year is inevitable, a leading economist says.
there are a lot of risks around this forecast as the situation
• BIS Oxford Economics Chief Australia Economist Sarah is still evolving. If the peak in infections gets pushed out
Hunter declared that it was no longer plausible to expect that to the third quarter, we will see a deeper downturn”
Australia could avoid a recession in the first half of this year
brought about by dislocation associated with COVID-19.
ANZ Research - Blue Lens, 17 March 2020
“Given the size of the dislocation that we are looking at,
Source: ANZ Live
we now think that even with the government’s stimulus
package announced last week and the support that this • We would discourage too much focus on potential recovery
will provide, we don’t think it is going to be possible for until the full dimensions of the unfolding slowdown become
the economy to avoid a recession,” Hunter said. clearer. We probably aren’t yet through the epicentre, and
managing through that should be the focus for most.
• According to Hunter, the economy will contract by
around 0.5 percentage points in the March quarter • The reality is economic policy simply cannot offset the
amid a loss of income from students and tourism demand loss that comes from widespread economic
along with the hangover from the bushfires. shutdowns. Economic policy can only partially offset some of
the impact, hopefully forestall the cascading impact through
• In the second quarter, she said precise forecasts are difficult
the financial weak points in each economy, and try and limit
as the impact depends on the extent of any lockdowns.
the structural damage the economy might suffer that would
• Nevertheless, Hunter said prospects for this quarter are ‘very limit its ability to recover from the crisis when that comes.
negative’ notwithstanding government stimulus measures.
• It’s the logistical response which is needed to slow the
• According to Hunter, the fallout from the virus globally and spread of the virus, and the medical response which
in Australia will come both from supply chain disruption will create the foundation for recovery. We have really
and lower demand from both business and consumers. only just started to see the economic impact of the
choices governments are making in these areas.
• On the former point, she says supply chains are being
affected by the disruption of activity in China. • If the objective of shutdowns and social distancing is to slow
the spread of the virus such that hospital systems are not
• Regarding demand, Hunter said the virus will affect
overwhelmed, they could be in place for months and quarters,
both business investment and consumer spending.
rather than just weeks. Economic activity, therefore, is likely to
• BIS expects private sector investment to drop by around five to stay subdued for some time.
six percent nationally in both 2019/20 and 2021 as investment
plummets in machinery and equipment and continues to be
negative in both housing and non-residential investment.
4Westpac Bulletin, 18 March 2020 • Economic growth through 2020 is now estimated at 1.5%
with minus 1% in the first half and 2.5% in the second half.
• New changes resulting from COVID-19 has
meant that Westpac has revised down its • The national unemployment rate is now forecast to reach
economic forecasts from last week. 7% by October 2020 (up from the previous estimate of
5.8%-6.0%) due to the larger negative shocks to the labour
• Not surprisingly, as these events have moved quickly, Westpac intensive sectors such as recreation; tourism; education;
has made some major changes to its estimates of the impact renovations and additions; and dwelling construction.
of COVID-19 in both the March quarter and the June quarter.
• This lift in the unemployment rate is despite reducing the
• It has increased its estimate of the shock to the most participation rate from 66.1% to 65.4% as a discouraged
exposed component of consumer spending (hotels; worker effect – that is, as workers respond to a deteriorating
restaurants and cafes; recreational services; and air travel) labour market the participation rate is likely to decline.
to minus 40% over the two quarters from minus 25%.
• These forecasts are not based on Australia
• Westpac has increased the expected shock to consumer following a European style full lock down. Not
durables to minus 7% and revised up the negative surprisingly, the forecasts are subject to downward
impact on home renovations and additions. revision in the event of such an occurrence.
• Outbound and inbound tourism is expected to
contract by 80% over the two quarters.
• Overall consumer spending is forecast to contract
by 0.1% (March quarter) and 2.8% (June quarter)
before recovering by 1.9% in the September
quarter and 1.0% in the December quarter.
Summary of Policy Responses Australian and South Australian
Governments as at 31 March 2020
The Guardian 31 March 2020 • 22 March – government announces a second major
economic rescue package worth $66bn including a
• Measures total $213.6bn from the commonwealth, $11.8bn $550 coronavirus supplement to jobseeker payments
from the states and $105bn in RBA-government lending and a second $750 payment to welfare recipients.
• The $130bn support package announced by the Morrison • 30 March – government announces $130bn in the third
government on Monday is the largest plank in a raft support package, including a $1,500 fortnightly jobkeeper
of measures to keep Australians in jobs and support payment for employers to pass on to employees to keep them
those out of work, unprecedented in its scale. in work, and extending eligibility for jobseeker payments.
• Every state and territory has announced stimulus packages
that, along with the impact of COVID-19-related closures
South Australian Government
on their revenue, are expected to put them all in deficit.
• 11 March – government announces a $350m package
• By the end of March, the measures announced totalled
to bring forward infrastructure spending and start new
$213.6bn in direct, on-budget spending from the federal
projects in road maintenance, housing, tourism and health.
government, $11.8bn from the states and $105bn in lending
from the Reserve Bank and the federal government. • 26 March – government announces a second package worth
$650m, including $300m for businesses and industries
and $250m for community organisations and training.
Federal government
• This spending will be guided by an Industry
• 12 March – government announces a $17.6bn stimulus Response and Recovery Council.
package including $4.76bn for $750 payments to
welfare recipients and $6.7bn for businesses for Note the latest data is often a few months old and the
wage subsidies (mainly to retain apprentices). data and commentary below relates to pre-COVID-19
period and needs to be seen in that context.
• 19 March – the Reserve Bank of Australia announces a
$90bn three-year funding facility to help banks continue
to lend to business, and the Morrison government
contributes $15bn skewed to smaller banks and non-
authorised deposit-taking institution lenders.
5Building and Construction Indicators
Summary of ABS Indicators: South Australia
Monthly data (trend) Latest month Compared to Compared to a
previous month year earlier
Dwelling approvals (February 2020) 922 -2.6% 3.0%
• Private houses 681 0.0% -0.7%
• Private ‘other’ dwellings 214 -8.9% 7.5%
Quarterly data Latest quarter Compared to Compared to a
previous quarter year earlier
Dwelling commencements (Sep qtr 2019, seas. adj.) 2,470 1.9% -8.8%
Construction work done (Dec qtr 2019, chain vol. seas. adj.) $2.8b -5.4% -9.0%
• Residential $0.8b 1.5% -6.6%
• Non-Residential $0.6b -5.8% -4.3%
• Engineering $1.4b -9.1% -12.3%
Construction work in the pipeline (Jun qtr 2019, original) $6.5b 2.2% -26.3%
• Residential $2.7b 2.4% -2.5%
• Non-Residential $2.4b -1.6% -14.2%
• Engineering $1.4b -9.3% -57.7%
Construction industry employment (Year to Feb qtr 2020) 73,928 na 3.7%
SOURCE: ABS DATA, VARIOUS PUBLICATIONS
ABS Building Approvals - February 2020, Cat. No. 8731.0 Table 1: Trend Dwelling Approvals by State
data - Analysis by CITB
Feb 20 v Feb 19
• The total number of dwelling approvals in South Australia in
(% change)
February 2020 was 3.0% higher than a year ago. Conversely,
nationally, the number of dwelling approvals was 2.5% lower NSW -19.4
than a year ago.
VIC +21.9
• The number of private sector houses approved for
QLD -3.5
construction in South Australia was unchanged during
February but was 0.7% lower than a year ago. SA +3.0
• Private ‘other’ dwelling approvals in South Australia fell by WA -18.2
8.9% in February but were 7.5% above their level of a year TAS -12.9
ago.
AUS --2.5
SOURCE: ABS BUILDING APPROVALS DATA
South Australia Monthly data Latest Compared
(trend) Month to a year
earlier
Dwelling approvals (February 2020) 922 +3.0%
- Private houses 681 -0.7%
- Private ‘other’ dwellings1 214 +7.5%
Non-residential building approvals $139.2m -13.6%
SOURCE: ABS BUILDING APPROVALS DATA
1
Other’ dwellings includes semi-detached, town houses, units, and multi-storey apartments.
6Chart 2: Total Number of Dwelling Approvals Chart 3: South Australian Non-Residential
Per Month Buildings Approved $M per month
SOURCE: ABS BUILDING APPROVALS DATA
SOURCE: ABS BUILDING APPROVALS DATA
• During February, the value of non-residential building approvals
fell by 14.1% in South Australia and by 13.6% through the year.
Other Commentary on Building and Construction Indicators
Australian Securities and Investments Commission (ASIC) – Companies Entering External Administration by Industry
Source: ASIC
• The table below summarises the data for construction in South Australia, by comparing it to all industries in South Australia and to
construction nationally. Insolvencies in construction were actually lower in 2018-19 than in 2017-18 and are well below the number
in 2013-14. On average, the construction sector makes up around 16% of all insolvencies in South Australia, which is well above its
employment or Gross State Product share (around 8%).
Table 2: Companies Entering External Administration
Construction All industries Construction SA % of Aus
% of SA total
SA SA Aust construction
2013-14 64 393 1802 16.3% 3.6%
2014-15 47 362 1591 13.0% 3.0%
2015-16 55 386 1647 14.2% 3.3%
2016-17 39 311 1509 12.5% 2.6%
2017-18 57 341 1354 16.7% 4.2%
2018-19 52 347 1515 15.0% 3.4%
Jul-Jan YTD 29 179 1016 16.2% 2.9%
SOURCE: ASIC
7Savills Research – Quarter Time National Office, • The Walker Corporation development at Festival Plaza and
Q4 2019 the Cbus development at 73-85 Pirie Street Adelaide are
likely to be the next buildings to come out of the ground with
Source: Savills 2 active lease requirements from the State Government and
• The Defence, Information Technology, Education and Commonwealth DHS likely to trigger a new office project.
Mining sectors expansion is helping to keep demand
for quality office space healthy in South Australia. The table below summarises some of the major upcoming and
planned office development projects in the Adelaide CBD.
SOURCE: SAVILLS RESEARCH, CORDELLS; UC = UNDER CONSTRUCTION, DA = DEVELOPMENT APPROVED, PS = PLANS SUBMITTED
Savills Research – Quarter Time National Office, • The future development pipeline will now be somewhat
Q4 2019 questionable as to whether they commence, as Coles
and Woolworths had been forced into upgrades of sites in
Source: Savills response to Kaufland’s entry into the Adelaide market.
• There had been a surge in development approvals
in the 2nd half of 2019 as a result of Kaufland’s • Savills Research expect developers to remain
then expansionary strategy. News in late January cautious and disciplined until conditions recover.
that Kaufland will exit Australia has resulted in the
cancelation of all their development projects.
SOURCE: SAVILLS RESEARCH, CORDELLS; UC = UNDER CONSTRUCTION, DA = DEVELOPMENT APPROVED, EP = EARLY PLANNING, LF = LARGE
FORMAT; NH = NEIGHBOURHOOD; PS = PLANS SUBMITTED; SR = SUB REGIONAL; MU = MIXED USE
8Cordell Construction Monthly, March 2020 • A consortium comprising CPB Contractors, Aurecon and
GHD has been awarded the tender to deliver three major
• Planning for numerous school upgrades is underway projects under the Port Wakefield to Port Augusta Regional
in preparation for the Year 7 to high school initiative, Projects Alliance (RPA). The three projects are the Port
whereby Year 7 public school students will be taught in Wakefield Overpass and Highway Duplication, the Joy
high school from term 1, 2022. A development application Baluch AM Bridge Duplication and the Augusta Highway
has been submitted for a $32 million upgrade of Unley high planning project between Port Augusta and Port Wakefield.
School. Works are scheduled for completion before 2022
prior to the commencement of Year 7s at the school. • Tenders have been invited for main works for the $149
million Yatala Labour Prison which will contain 270
• Tenders have been invited for Hallett Cove School. high security beds. Early works comprising car park,
Transportable buildings will be removed, some with asbestos, business centre and staff training and wellbeing centre
and replaced with contemporary facilities, refurbishment are being carried out by Sarah Constructions, and are
of existing learning areas, including specialised learning due for completion towards the end of the year.
areas for science, technology, engineering and maths.
Employment and Unemployment
ABS Labour Force Australia, February 2020 – Cat. No. Chart 4: Unemployment Rates (%)
6202.0 (analysis from Department of Treasury and
Finance)
• During February, the unemployment rate:
was 5.8% in South Australia in both trend and
seasonally adjusted terms (5.1% nationally).
• South Australia has the highest
unemployment rate of all the states.
• Through the year trend employment growth was down
0.2% for South Australia but up 1.9% nationally.
• South Australia’s labour force participation rate has
fallen by 0.8 percentage points over the past year,
compared to a rise nationally of 0.3 percentage points.
SOURCE: CHART REPRODUCED FROM DEPARTMENT OF TREASURY
AND FINANCE, ECONOMIC BRIEFS.
• Underemployed workers are those who are employed part-
time and who want (and are available for more hours of work
than they currently have. The trend underemployment rate in
South Australia was 9.8% in February. As a result, the overall
trend labour force underutilisation rate was 15.6% in February,
up from 14.8% a year earlier (nationally the rate is 13.7%).
9ABS Labour Force Australia Employment by Industry,
February quarter 2020 – Cat. No. 6291.0.55.003
(analysis from CITB)
• The remarkable rise in employment in South Australia’s
construction sector (20% over 5 years), appears to
have peaked as at the year to February 2020 and can
be expected to decline as the impact of COVID-19
takes hold – see Charts 8,9 and 10 below
Chart 5: Workforce SplitsSplits
Workforce Construction Industry
Construction — South
Industry, Australia
South Australia
35.0
30.0 Workforce Splits Construction Industry, South Australia
25.0
35.0
20.0
30.0
000s
15.0
25.0
10.0
20.0
5.0
000s
15.0
0.0
10.0
5.0
0.0
Housing Commercial Civil
Share of Total Construction
Housing
Employment - South Australia
Commercial Civil
50.0%
Chart 6: Share of Total Construction Employment — South Australia
Share
40.0% of Total Construction Employment - South Australia
% of total
50.0%
30.0%
40.0%
20.0%
% of total
30.0%
10.0%
20.0%0.0%
10.0%
0.0%
Housing Commercial Civil
Housing Commercial Civil
Chart 7: Total Employment — Construction South Australia
Total Employment - Construction South Australia
80.0
70.0
60.0
50.0
40.0
000s
30.0
20.0
10.0
0.0
Feb-88
Feb-90
Feb-92
Feb-94
Feb-96
Feb-98
Feb-00
Feb-02
Feb-04
Feb-06
Feb-08
Feb-10
Feb-12
Feb-14
Feb-16
Feb-18
Feb-20
• Compared to 5 years ago, construction employment in
South Australia has increased by 13,200 (22%).
10Vacancy Report – February 2020, Australian
Government Department of Employment, Skills,
Population
Small and Family Business
Source: Australian Government Analysis by Department of Treasury and Finance
• The COVID-19 pandemic is likely to have an effect • During the year to September 2019, South Australia’s
on recruitment activity, however, the impacts Estimated Resident Population (ERP) increased 0.9%
are not evident in the February 2020 Internet (or 15,400 persons) to 1,756,494 people. Nationally,
Vacancy Index data covered by this release. the ERP increased 1.5% to 25,464,116 people.
• Nationally, the Internet Vacancy Index (IVI) fell slightly by • Population growth over the year by jurisdiction, from
0.27% in February 2020. The IVI is 9.0% (or 16,100 job highest to lowest was: Victoria (2.0%), Queensland
advertisements) below the level recorded a year ago. (1.7%), ACT (1.5%), New South Wales (1.3%), the
• South Australia experienced a decrease of Western Australia (1.1%), Tasmania (1.0%), South
3.1% in vacancies over the past year. Australia (0.9%) and the Northern Territory (-0.6%).
Chart 8: IVI Annual Change, by State/Territory (%) Chart 9: Annual Population Growth
South Australian Centre for Economic Studies
(SACES) – Data Wrap March 2020
• Labour market conditions in South Australia remained SOURCE: CHART REPRODUCED FROM DEPARTMENT OF TREASURY
relatively stable in February in the face of major AND FINANCE, ECONOMIC BRIEFS.
headwinds in the form of the coronavirus outbreak
and lingering effects of the summer bushfires.
• As we have noted in our previous analysis of labour
market data, unemployment has recently fallen in South
Australia in response to people leaving the labour
force. This ‘discouraged worker’ effect continued
in February with the labour force participation rate
falling by 0.1 percentage points to 62.3 per cent.
• The deterioration in labour force participation has been quite
pronounced over the past year with the participation rate
falling by 0.8 percentage points. This decline contributed
to a small fall in the state’s unemployment rate over the
past 12 months (down 0.2 percentage points) even though
total employment levels actually fell slightly over this
period (down 0.2 per cent). And with employment levels
failing to grow let alone keep pace with population growth,
underemployment in South Australia has risen significantly
over the past year, by 1.0 percentage points to 9.8 per cent.
11Commentary on General Economic Conditions
ABS Retail Trade Data – January 2020, ABS Cat. No. • Easing monetary policy is not yet having its desired impact. It
8501.0 (analysis by Department of Treasury and appears the RBA cannot do this alone, and there are growing
Finance) calls for greater government intervention via infrastructure
spending into regional and metropolitan areas, as well as
personal income tax cuts reform to encourage spending.
Chart 10: Through Year Growth in Real Retail Turnover –
Trend • The unintended consequence of the resulting low for longer
interest rate environment, is that investors (domestic and
international) are aggressively chasing income producing
assets, particularly property assets with strong lease
covenants. In addition, investors continue to seek assets
with future development and value add potential.
SOURCE: CHART REPRODUCED FROM DEPARTMENT OF TREASURY
AND FINANCE, ECONOMIC BRIEFS.
• Compared with a year earlier, nominal retail turnover was
1.2% higher in South Australia and 2.3% higher nationally.
Savills Research – Quarter Time National Office, Q4
2019
• The Australian economy remains defined by continued
low inflation at 1.8%, a stubborn unemployment rate of
5.2% and a worryingly high underemployment rate of 8.6%,
resulting in an underachieving GDP growth rate of 1.7%.
• As such business and consumer sentiment remains weak,
with business investment below trend. With this back
drop (one that is similar to other western economies),
the Reserve Bank of Australia has continued to pump
prime the economy with lower interest rates, easing
again on 1 October 25bp to an all-time low of 0.75%.
• 2019’s easing in Monetary Policy are arguably yet to be fully
felt through the economy, but it’s clear the RBA is trying to
kick-start activity to address an underachieving economy.
12THE FUTURE IS YOURS TO BUILD
13You can also read
