This document summarizes the Hunter Region Economic Indicators report for the June 2017 quarter. It finds that while business confidence and performance in the Hunter region remains strong, household sentiment and spending are more subdued. Specifically, business confidence and profitability are above long-term averages, and full-time employment is growing. However, consumer spending and confidence are relatively low, and the residential housing market is slowing. Overall, the report finds divergence between optimistic businesses and more cautious households in the regional economy.

1. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Hunter Economic Indicators
June Quarter 2017
Dr Anthea Bill, Lead Economist
Hunter Research Foundation Centre
Presentation – Friday 4 August 2017

2. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Presentation outline
• International: moderate growth, Euro-zone improves
• National: GDP slows but labour market improves
• Hunter Economy: divergence ~ businesses & households
• Youth labour market

3. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
OECD: GDP results March quarter
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
Quarterly Real GDP Growth
Australia
%
GDP: Gross Domestic Product

4. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Unpacked: Australia’s March GDP result
Exports
Housing
Services
Consumption

5. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Summary macro trends
• Weakening of quarterly GDP result
• Unemployment rate 4-year low, full-time job
growth trends up
• Consumer spending soft in line with modest
income growth
• Moderation in house price growth, recent
resurgence Melbourne
• Global backdrop improved: Euro-zone
improves and Chinese growth continues

6. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Youth Employment and Opportunities

7. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
3.0
5.0
7.0
9.0
11.0
13.0
15.0
17.0
19.0
Jun-11 Feb-12 Oct-12 Jun-13 Feb-14 Oct-14 Jun-15 Feb-16 Oct-16 Jun-17
Youth, Hunter Youth, NSW Youth, Australia
Comparison, youth unemployment rates
Source: ABS Labour Force Survey.
%
Mining
CAPEX
Investment

8. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Record high: Youth underemployment rate
Source: ABS Labour Force Survey.
0
4
8
12
16
20
1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017
15-24 25-34 35-44 45-54 55+
National Underemployment Rate

9. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Youth apprenticeships
Completions, youth apprenticeships and trainees

10. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Hunter Economy

11. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Full-time job growth
Employment (3-month moving average), Hunter and NSW

12. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Unemployment rate falls, above NSW
Unemployment rates (3-month moving average), Hunter and NSW

13. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Residential market, median price decline
Median house prices

14. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Decline approvals new houses: blip or a trend?
Annualised new housing approvals

15. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
HRF Centre’s
Hunter Pulse Surveys
300 businesses and 300 consumers

16. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
-0.2
-0.1
0.0
0.1
0.2
0.3
0.4
JUN 02 JUN 05 JUN 08 JUN 11 JUN 14 JUN 17
SOURCE: HRF Centre Pulse Business Surveys
* linear extrapolation due to missing data, June quarter 2015.
Business: recovery continues
Business confidence and profitability
Business Confidence
(12 months)
Profitability*
(last 3 months)

17. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Consumer sentiment: relatively subdued
Consumer spending and confidence

18. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Consumer spending: downward shift
Hunter consumer spending, longer-term
0.00
0.10
0.20
0.30
0.40
0.50
JUN 02 JUN 04 JUN 06 JUN 08 JUN 10 JUN 12 JUN 14 JUN 16
SOURCE: HRF Centre Hunter Pulse Household Surveys
Pre-GFC*
average
Post-GFC
average
*GFC, Global Financial Crisis.

19. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Regional outlook…households & businesses diverge
12-Month economic and financial outlook

20. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Strong signs…
– Business performance strengthens, and confidence
above average
– Full-time job growth, youth unemployment trends down
– Business and household confidence in regional economy
above long-term averages
Downside risks...
– Softness in labour market - underemployment
– Household consumption subdued
– Slowing of residential housing market
Summary: Household & business optimism diverge

21. Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
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