Whether you believe there is a “housing bubble” or not, there is no question that the increase in new building approvals that has been consistent for most of the year has fuelled jobs growth across the sector.
In addition, a continued focus by State and Federal Governments on infrastructure development is likely to create talent shortages in the coming months and years.
The May Australian Bureau of Statistics (ABS) Labour Force figures caught the market by surprise with most analysts expecting the unemployment level to remain steady, but the fall from 6.2 per cent to six per cent now sees the Australian unemployment rate at its lowest for 12 months.
This was as a result of 42,000 new jobs being created in May. This number also comes off the back of continued improvements in the number of jobs advertised with the ANZ Job Ads Index showing a 14 per cent increase over May 2014 and the 19th consecutive month of month on month job ads growth.
But before we celebrate the decline in our jobless rate too quickly, we need to take a pause and consider the type and the quality of the jobs, as of the 42,000 jobs created only 14,000 were full-time jobs. The rest were part-time and reflect some of the business uncertainty we still see in the wider business community and the demand for more workplace flexibility.
However, despite broader business uncertainty and the decline in jobs in the mining sector over the last few years, fuelled further by the continued uncertainty around commodity prices, the construction sector as provided a rare beacon of jobs hope and growth for the Australian economy.
Last year, we saw an increase in jobs demand across the design and architecture disciplines and were forecasting that this would translate to larger jobs growth in 2015 as these projects moved in to the build phase. And with some help from record low interest rates we have seen high demand for building and finishing trades with the Seek Monthly Job Ad Index showing that demand for landscapers was up by 55 per cent, plumbers by 52 per cent, building trades by 45 per cent and labourers by 23 per cent when compared to the same period in 2014. This demand has also helped young workers to get heir first foot on the employment ladder with reported increases in demand for building trades apprentices.
At a state level, demand has been highest in NSW, closely followed by Victoria and Western Australia where despite the decline in the mining and resources sector the State unemployment rate is one of the lowest in country at 5.1 per cent. In these states, it is becoming increasingly hard to source skilled talent across the building trades. In NSW and Western Australia, skill shortages are now being reported by building firms.
South Australia is the worst performing jobs market in the country with an unemployment rate of 7.6 per cent and little evidence of any stimulus that is likely to drive jobs growth there in the near future.
The Federal Government's small business tax package is also likely to have a significant impact on the availability of skilled building workers in the coming months as it is aimed at providing better cash flow that will help small businesses hire more staff. With the residential building sector made up of a large percentage of small business contractors, this is likely to further fuel demand for qualified trades people and apprentices.
So with record low interest rates stimulating new building approvals and tax incentives in place to help small business hire more staff, demand is going to be high for skilled labour . Whilst there has been a lot of talk in the media about the need for controls to dampen the spiralling cost of housing, caution will need to be exercised as this could have a negative impact on the jobs market that is benefiting from this building boom at a time when the economy can not afford to see increases in the unemployment rate.