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Co-founder & CEO of AllenWargent property buyers & WargentAdvisory (subscription market analysis for institutional clients).
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Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).
4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.
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A year ago I made the casual observation that the Australian economy had reached an impasse of sorts: either population growth would have to fall, or employment growth would have to rise.
Leading indicators tentatively pointed towards the latter, and in the end, that's what we got.
In fact, over the past ten months employment has torn +277,880 higher to a record high of more than 12.2 million.
Over the most recent five months the gains have totalled more than +189,000.
You have to go back more than a dozen years to find a hot streak like it.
Naturally we got all the usually debates about whether the figures were 'right' or not, but drilling the trend line through the figures shows that annual employment growth has accelerated to a reasonably impressive +2.2 per cent, or +259,220.
Queensland (+27,000) accounted for almost all of the gains in the noisy monthly figures.
Over the past quarter the the +87,500 net increase in employment has largely been centred upon New South Wales (+35,000) and Queensland (+33,600).
Unemployment rate improving
The trend unemployment rate has steadily improved over 33 months from 6.25 per cent in October 2014 to 5.62 per cent in July 2017.
The participation rate edged inched up in July, while the trend employment to population ratio is now back up to the strongest level since May 2013.
So things have evidently been on the mend, though it's a sobering thought that the UK now has an unemployment rate of just 4.4 per cent, the lowest reported reading since 1975.
At this rate it will be a few years before Australia gets anywhere close to full employment, if international trends are anything to go by.
New South Wales has by far the best trend unemployment rate of the most populous states at 4.8 per cent.
But the surprise package here is Western Australia, where trend full time jobs have been improving for 10 months and the unemployment rate has declined to 5.4 per cent, now materially lower than the national average.
And finally, for the many doubting Thomases, the annual trend in monthly hours worked improved to +2.5 per cent, the best result in 19 months.
There's been plenty of talk of wages growth in Australia picking up the pace again as the labour market improves.
But with plenty of underemployment and spare capacity around, there's barely a flicker of that yet.
Wages growth came in at +0.5 per cent for the June 2017 quarter, and +1.9 per cent for the year.
For all the hand-wringing about record low wages growth and so on, it's worth noting that wages have comfortably outpaced inflation over the past decade.
Wages growth is still ahead of underlying inflation even now, if only just.
Not so widely reported was that public and private sector wages growth including bonuses increased by +0.7 per cent in the quarter - the strongest result for the June quarter since 2010 - to be +2.1 per cent higher over the year.
Furthermore, the numbers of hours worked in the economy has been rising solidly over the past 12 months, even if growth in the hourly rates of pay has been subdued.
Public sector wages growth has been surprisingly robust in rising by +2.39 per cent over the financial year.
But private sector wages growth really has been in the doldrums, increasing by only +1.78 per cent.
You can see here how private sector wages growth has tailed off since the peak of the resources boom.
The unemployment rate in New South Wales has fallen to just 4.8 per cent - across Greater Sydney it is now below 4.4 per cent - yet to date there are still few signs yet of wages growth really picking up.
Indeed, annual wages growth around the traps was remarkably similar across the states and territories, tracking in a range of +1.9 to +2.1 per cent, with Western Australia the sole laggard at +1.4 per cent.
Although lower nominal wages growth is seen as a 'bad thing', it is also a mechanism which helps the labour market to adjust through weaker periods.
Contrary to what you might think, across the past two decades the strongest percentage growth in wage prices has been seen in Western Australia, then South Australia, and then the Northern Territory (although there are of course wide variations within the states).
Industry trends - services sectors lead
There was a strong +0.8 per cent quarterly pick up in mining wages in the second quarter, with many workers apparently being awarded their first significant pay rise in a couple of years or so, but in annual terms mining wages have still been limping along at +1.1 per cent.
Wages growth in rentals, hiring, and real estate has also been very subdued, reflective of the notable evidence of new entrants to the industry.
Over the financial year the top performing sector was healthcare and social assistance, an industry that has seen gargantuan employment growth over the past two decades.
Education and training has been another area of focus for wages growth, perhaps reflective of the surge in international students hailing from Asia.
Wages growth in financial and insurance services remains quite moderate at +2.1 per cent.
With wages growth stuck at these low levels there are few inflationary pressures around, and there's pretty much zero chance of interest rates being hiked any time soon.
An optimist might say that in unrounded figures annual wages growth is marginally higher than it was in the final quarter of 2016, though that might be clutching at straws a bit.
Including bonuses, wages growth was better, suggesting that the bottom may well now be in.
Indeed, with minimum wages increases taking effect from 1 July, annual wages growth will very likely be stronger next time around.
With hiring in the labour market improving strongly in 2017 - and with other forward-looking indicators appearing quite robust - the Reserve Bank anticipates a return to full employment, but also that it may well take a few years for that to play out.
In the meantime, it seems that many employees will have a tough gig negotiating pay rises.
Hobart's vacancy rate fell from 0.7 per cent to just 0.5 per cent in July 2017, according to SQM Research data.
That's probably close to about as low as you will ever see in a capital city, based on the prevailing measurement criteria.
Sydney's vacancy rate was a notch lower at 2 per cent, while Melbourne's vacancy rate of 1.7 per cent was materially tighter than the 2.1 per cent result for the same month last year.
Overall, the national vacancy rate ticked down from 2.4 per cent to 2.3 per cent in the month.
At the other end of the spectrum vacancy rates are elevated in Darwin, Perth, and for apartments in Brisbane.
Melbourne's outperforming economy has been attracting interstate migrants from Western Australia, Adelaide, the Northern Territory, and lately even from Sydney.
And that's on top of the strong immigration from overseas.
As a result vacancy rates are tracking at around their lowest level in years.
Smoothing the original numbers on a 6mMA basis is a tad misleading since there is typically a spike over Christmas, but it's more than evident that Melbourne vacancy rates have clearly been trending down for several years now.
The nail in the coffin for the predictions of an imminent Melbourne plunge is that not only are prices rising, but now asking rents are too, with median apartment rents heading up and away (+5 per cent year-on-year).
This has nothing on Hobart, though, where both rents and prices are now blazing higher at a double digit pace.
And then there's the surge in Chinese interest in Tasmania.
Normally you'd expect to see a dramatic supply response ramp up in such circumstances.
To date developers have possibly held back a little given the logistical challenges and costs posed to those based on the mainland, although a range of major hotel and commercial projects have certainly been touted.
It'll be interesting to see if locals now get building.
But for the foreseeable future it will be a feeding frenzy as buyers race to escape the woeful conditions for renters.
There was a strong +11 per cent increase in net permanent and long term immigration into Australia in FY2017 to a total of +291,300.
This represents a marked increase, mirroring the recent improvement in the economy and jobs growth.
Most are heading to Sydney and then Melbourne, with daylight a surprisingly popular third choice.
Asia accounted for 56 per cent of permanent settlers, with underlying strength in the numbers hailing from China (17,780), and especially India (23,010).
The increased humanitarian intake also saw the settlement of 9,370 Iraqis across the financial year.
On the other hand are now comparatively few permanent settlers from the United Kingdom (6,180) and New Zealand (8,100).
You can insert your favourite Barnaby Joyce quip here, should the mood take you.
Tourists, tourists, everywhere...
Following the depreciation of the Aussie dollar there has also been a tremendous surge in annual short term visitors, mushrooming by +45 per cent from 5.9 million in FY2012 to a record 8.6 million in FY2017.
Sydney still attracts the most tourists, so these prodigious numbers potentially put a different slant on the assumed apartment oversupply, as well as representing a boon for businesses in the Airbnb space.
In absolute terms, the growth in short term arrivals was again largely driven by the thunderous 1.7 million visitors from China, Taiwan, and Hong Kong (+167,300).
But there were also very strong percentage gains from the United States (+16 per cent), Canada (+14 per cent), Japan (+12 per cent), India (+15 per cent), Other Asia (+13 per cent), and Other America (+17 per cent).
Some of this trend is currency driven, and some due to awareness of Australia as a destination.
Finally, FY2017 was also a record year for education arrivals, including a monster intake of international students in the month of February, in advance of the first Semester in March.
The education boom is largely a Sydney and Melbourne phenomenon, as indeed has been the case for most of the thriving sectors since the 2012 financial year.
Overall, these were strong demographic numbers for FY2017, with Australia attracting more long term arrivals, and visitors in record numbers.
And just think of all those future politicians arriving on Aussie shores!