• Solid demand for coal and related industries underpins the fortunes in the Hunter while challenging conditions in the tourism sector has reduced job opportunities in Cairns and related areas.
• Regions close to city centres continue to experience lower rates of unemployment than regions further away from CBDs. But there are cracks beginning to appear. Both inner Sydney and central Perth experienced big reductions in employment over 2011.
• Southern Melbourne recorded the largest lift in employment over 2011.
• The inner Sydney region lost almost 11,000 jobs over 2011 and the unemployment rate rose from 3.5 per cent to 4.7 per cent. The NSW Government should be closely dissecting reasons for the slump in a previously super-strong regional job market.

The lows and highs of unemployment

• There have been few changes in the rankings of high and low unemployment regions. Both the Far West of NSW and Far North of Queensland have the highest unemployment rates in the nation. Far North Queensland, centred on Cairns, had a jobless rate averaging 8.8 per cent over 2011 – more on par with unemployment rates recorded in the US or Europe. And Far West NSW had an average jobless rate of 8.5 per cent over the past calendar year. There will always be haves and have nots across the Australian economy but clearly these regions should be the subject of policy action by state and Federal governments.
• The high jobless rate in Far North Queensland can be put down to the high Australian dollar and global uncertainties, crimping tourist flows to the region. The reasons for high unemployment in Far West NSW are less obvious, more a by-product of reduced job opportunities.
• The northern part of the Gold Coast is also a victim of challenging conditions affecting the tourism sector as well as a property downturn. The jobless rate in the Gold Coast North statistical region averaged 8.4 per cent in 2011.
• Canterbury-Bankstown (8.3 per cent) and Fairfield-Liverpool (7.3 per cent) continue to have far higher jobless rates than northern suburbs of Sydney. Central Northern Sydney (3.7 per cent), Lower northern Sydney (3.7 per cent), and Northern Beaches (3.4 per cent) all occupy spots in the ten lowest unemployment regions of the nation.
• In contrast to high unemployment rates on the Gold Coast, Sunshine Coast, North Queensland, and Wide Bay Burnett (including towns like Maryborough, Hervey Bay and Kingaroy) inner Brisbane had one of the lowest jobless rates in the nation over 2011 at 3.6 per cent.
• Regions close to city centres dominate the low jobless rate rankings with Inner Melbourne (3.4 per cent) joining inner Brisbane together with Central Northern Sydney and Central Metropolitan Perth.
• Just like Brisbane and Sydney, the further you travel away from the Melbourne CBD, the higher the unemployment rate with Outer western Melbourne (6.8 per cent) and North Western Melbourne (6.6 per cent) both in the ranks of 10 highest jobless rates in the nation. And Northern Adelaide (7.9 per cent) is another region to follow this trend.

The job creators and shedders

• One of the big surprises over the past year has been the slump in employment in inner Sydney. Between December 2010 and December 2011, almost 11,000 jobs were lost in inner Sydney. The jobless rate in inner Sydney is still reasonably low at 4.7 per cent, but it is well up from an average of 3.5 per cent in 2010 and no longer amongst the lowest unemployment regions in the nation. Clearly the NSW Government forensic team should be investigating the reasons for the sharp deterioration in the economic fortunes of inner Sydney.
  Interestingly the low jobless region of the Hunter lost over 9,000 jobs over 2011 with the deterioration setting in from September. The jobless rate also rose from 1.9 per cent to 2.3 per cent. Admittedly the changes have taken place from what was probably an unsustainably strong job market.
• Another interesting result was the differing fortunes of Gold Coast North and Gold Coast South in 2011. Gold Coast South created 9,000 jobs while Gold Coast North shed almost 2,000 jobs over the year, although admittedly Gold Coast North is far larger.
• The job creating regions were dominated by Victoria and Western Australia. In Southern Melbourne over 12,000 jobs were created with Loddon-Mallee creating almost 11,000 jobs and North Eastern Melbourne adding over 7,000 jobs. And in Western Australia, South Western Perth, Regional and Lower Western areas were major job creators.

What are the implications for investors?
There is much talk of multi-speed economies, but sharply differing economic fortunes can exist within capital cities and within states let alone across the nation. The lowest unemployment rate in the nation doesn’t exist in Western Australia but in the Hunter of NSW, while the South Eastern region of NSW has the second lowest jobless rate. It is clear that there are greater regional differences in states like NSW, Victoria and Queensland than Western Australia.
A good knowledge of the differences across Australia is helpful for investors to understand the variable conditions being faced by Australian businesses.

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It was the second consecutive fall in jobs and fourth decline in six months. Employment previous fell by 7,600 in November (previously reported as a 6,300 decline).

• Part time jobs slump: In December part-time jobs fell 53,700 after rising by 31,900 in November, Full-time jobs rose by 24,500 after slumping by 39,400 in November.
• Weakest year since 1992: Over 2011 jobs fell by 100 positions – the weakest result since 1992.
• Jobless rate unchanged: Despite the drop in jobs, the unemployment rate was unchanged at 5.2 per cent. The participation rate fell from 65.5 per cent to 65.2 per cent as jobseekers gave up the search for positions.
• More hours worked: The number of hours worked rose by 0.3 per cent in December as employers asked staff to work longer hours rather than taking on new workers.
• Unemployment across states and territories: NSW 5.6 per cent (5.2 per cent in November); Victoria 5.2 per cent (5.5 per cent); Queensland 5.4 per cent (5.7 per cent); South Australia 5.3 per cent (5.3 per cent); Western Australia 4.3 per cent (4.3 per cent); Tasmania 6.2 per cent (6.1 per cent); Northern Territory 4.4 per cent (4.3 per cent); ACT 3.8 per cent (3.8 per cent).
• Employment across state and territories: Jobs fell most in NSW (-20,400) followed by Victoria (-5,000), Queensland (-3,300), Western Australia (-2,500) and South Australia (-2,300). Jobs rose by 700 in Tasmania and rose in trend terms in Northern Territory (+700) and ACT (+700).

What does it all mean?

• The lack of momentum in the domestic economy is clearly being reflected in the labour market. Trading conditions have been tough over the past year and the ongoing impact on profitability is hurting businesses. And after holding out for the past six months Aussie businesses have finally decided to bite the bullet and start culling staff – albeit modestly.
• Jobs growth is now going backwards, adding to data showing sluggish retail spending, a weak housing market and lacklustre activity in manufacturing, services and construction sectors. In fact over 2011 there were no jobs created with a total of 100 jobs being lost – marking the weakest result for a calendar year since 1992.
• Interestingly December tends to be affected by seasonal factors, such as a pickup in hiring in the retail and service sectors. However this time it seems that retailers have been a lot more cautious, culling hiring plans due to the lack of consumer spending. In fact in original terms around 115,000 jobs were created in the December, compared with the decade average of 161,000 jobs. Clearly the seasonal workers bore the brunt of the weakness.
• Domestic business conditions are tough, and inherent weakness in the housing sector is filtering through to other parts of the economy. In addition the strength of the dollar continues to hurt the tourism dominated regions. And over the next few months the ongoing uncertainty about the global environment is likely to ensure businesses remain cautious and as such hiring intentions will continue to be scaled back – a result that has been mirrored in the ongoing weakness in job advertisements and will result in the unemployment rate rising modestly toward 5.7 per cent over the coming year.
• On a positive note, the rate cuts over the past couple of months will help to shore up confidence, alleviate interest costs for businesses and provide a modest degree of support to the economy. However the latest employment result cements our view that the Reserve Bank will likely have to cut interest rates over the next few months to stimulate activity.
• And while we may bemoan the flat job market, things could be worse. In Australia the jobless rate is still just 5.2 per cent, not 8.5 per cent or above as is the case in the US and many European economies.

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