* Forward-looking measures of labour demand all flashing
* Revival in consumer spending heralds recovery in retail
* Surge in home building to help construction over mining
By Wayne Cole
SYDNEY, April 9 Job losses in manufacturing have
dominated Australian headlines -- 350 at BP, 180 at
Philip Morris, 300 at Boeing in the past month
alone -- but data proven to herald increased hiring tell a much
In a country obsessed with real estate, a housing boom has
given people confidence to spend more freely -- and that may be
enough to keep a lid on unemployment in the year ahead.
"Overall, our range of forward-looking indicators of
economy-wide jobs growth unanimously point to improved hiring
intentions and a turning point in the labour market," said Scott
Haslem, chief economist at UBS.
Hopes are fixed in particular on retail and construction,
where a revival in consumer spending, an invasion of foreign
retailers and a surge in home building all bode well for a
sizable pick-up in employment.
If past patterns on measures such as job advertisements,
vacancies and a range of business surveys hold true, Haslem
estimates that retail, hospitality and wholesale combined with
construction could generate around 140,000 jobs in the coming
That would not be far from the 170,000 needed to stabilise
the unemployment rate near its current level of 6 percent.
"Our clients are always asking 'where will the jobs come
from?'" said Haslem. "But our analysis shows it is much less
difficult to answer the question than is widely believed."
The reasons for uncertainty seem clear. Unemployment has
risen to 6.0 percent, the highest since mid-2003. The central
bank expects the labour market to stay soft and the unemployment
rate to rise further.
In February, Toyota Motor Corp became the last of
the global automakers to say it planned to cease production in
Australia, triggering angst about the future of manufacturing.
FOREIGN BRANDS SET UP SHOP
But the situation for manufacturers is not as bad as the
headlines suggest. Over the six months to February, for example,
manufacturing actually added 38,200 jobs.
And after a long fallow period, retailers have enjoyed a
marked acceleration in spending in recent months. The annual
growth rate in sales quadrupled from a Scrooge-like 1.2 percent
in mid-2013 to a far more store-friendly 4.9 percent in
That is good news for the labour market as the A$270 billion
($250 billion) retail sector is the second-biggest employer
behind health, with 10 percent of all jobs. Add in the wholesale
and hospitality sectors, and the job share rises to 20 percent.
Australia's two biggest supermarket chains certainly seem
optimistic. Coles, owned by Wesfarmers, plans to invest
A$1.1 billion over the next three years building 70 stores and
creating more than 16,000 jobs. Rival Woolworths will
open 108 new stores in its 2014 fiscal year alone, generating
around 7,000 jobs.
The pipeline of construction work is already swelling, with
the value of building approvals across the retail and wholesale
sectors up 24 percent in February from a year earlier.
And it is not just local retailers. Australia is suddenly
attracting a flood of new entrants, encouraged by its strong
currency and rapid population growth.
Zara, Gap, H&M and Topshop are
among the big-name foreign retailers to have set up shop, while
Japanese casual-wear group Uniqlo opens its first store
in Australia this month, as does U.S. chain Brooks Brothers.
MANY HOMES TO BUILD, FURNISH
The revival in spending owes much to a red-hot housing
market. Historically low mortgage rates have unleashed pent-up
demand and lifted home prices in the major cities by over 10
percent in the past year.
Property consultant RP Data estimates there were almost a
quarter of a million properties advertised for sale over March,
yet demand stayed ahead of supply.
"Although new listings are way up on a year ago, the rate of
sale is much faster," says RP Data research director Tim
Lawless. "To put it simply, properties are being absorbed by the
market faster than they are being listed for sale."
The Housing Industry Association (HIA) estimates sales of
new homes jumped 4.6 percent in February to their highest in
almost three years.
All these homes have to be kitted out, boosting demand for
everything from furniture, to appliances to garden equipment.
Sales of household goods surged 3.8 percent in the first two
months of the year. Sales of hardware, building and garden
supplies grew an annual 10.7 percent, the fastest in a decade.
There is much more to come as approvals to build new homes
were up by almost a quarter in February from a year earlier and
not far from all-time highs at an annualised rate of 200,000.
The value of approvals for building new office space is also
running hot with annual growth up at 46 percent.
The bulging pipeline of work should help fill the hole left
as major mining projects start winding down or are completed.
"Importantly, there has been strength in job advertising in
some key industries, including construction," says Ivan Colhoun,
head of Australian economics at ANZ.
The bank compiles a monthly tally of job advertisements on
the Internet and in major newspapers. It found ads climbed to
132,925 in March, the highest in almost a year.
"There is now clearer evidence that labour demand is
strengthening," said Colhoun. "This suggests that conditions in
the labour market are beginning to improve, despite recent
job-loss announcements in a number of companies.
(Editing by Lincoln Feast and John Mair)