HRF Centre Upper Hunter Economic Update May 2017

Hunter Research Foundation Centre www.newcastle.edu.au/hrfc
Upper Hunter Economic Indicators
December Quarter 2016
Tuesday, 2 May 2017
Dr Anthea Bill, Lead Economist
Hunter Research Foundation Centre

• National Economy: rebound in growth
– Rebound in growth Dec quarter; broad based
improvement
• Upper Hunter Economy: positive signs
– Unemployment rate low; employment steady
– Sustained turn-around in business confidence &
consumer sentiment returning to trend
– Renewed confidence in regional outlook
– Housing market weak: prices and planned investment
below five-year average
Presentation outline

-1.0
-0.6
-0.2
0.2
0.6
1.0
1.4
1.8
2007 2008 2010 2011 2013 2014 2016
% Change
Source: ABS 5206.0 Australian National Accounts
Rebound in growth
GDP % change, quarterly
GDP % change, quarterly

-0.5
0.5
1.5
2.5
3.5
4.5
5.5
-1.0
-0.6
-0.2
0.2
0.6
1.0
1.4
1.8
2007 2008 2010 2011 2013 2014 2016
% Change % Change
Annual
Real GDP % Change,
annual
Rebound in growth
GDP % change, quarterly and annual
GDP % Change,
quarterly

Tailwind: commodity price increase
Commodity Prices and AUD
Source: Reserve Bank of Australia
40.0
60.0
80.0
100.0
120.0
140.0
160.0
0.40
0.60
0.80
1.00
1.20
1.40
1.60
2009 2010 2011 2012 2013 2014 2015 2016
$A / $US (LHS)
Index of Commodity
Prices (RHS)

Upturn terms of trade
Terms of Trade (Seasonally Adjusted)
70.0
90.0
110.0
130.0
150.0
2010 2011 2012 2013 2014 2015 2016

Lower AUD: driving regional tourism
0
0.5
1
1.5
2
2.5
3
0
2
4
6
8
10
12
2006 2008 2010 2012 2014 2016
Number of people
(million, LHS)
Expenditure
($bn, RHS)
Source: Destination NSW

Sluggish wage growth
Source: ABS, National Accounts.
0
1
2
3
4
5
2000 2002 2004 2006 2008 2010 2012 2014 2016
Wage Price Index Growth*
Year-ended
*Excluding bonuses
%

-3.0
0.0
3.0
6.0
9.0
12.0
2000 2002 2004 2006 2008 2010 2012 2014 2016
Households dip into savings
Household savings ratio (seasonally adjusted), Australia
Source: ABS, National Accounts.
GFC

Summary macro trends
• GDP rebounds in December following
September contraction
• Recent rise in commodity prices feeding
into terms of trade & revenue
• Unemployment rate higher in early 2017
and part-time stronger than full-time
• Resurgence in property prices continues
in Sydney and Melbourne
• Chinese growth stronger but global
uncertainty persists

Upper Hunter Economy

Employment growth
Employment (3-month moving average), Upper Hunter and NSW

Unemployment rate below the state
Unemployment rates (4 quarter moving average), Upper Hunter,
Hunter and NSW

Part-time jobs drive growth
Source: ABS, Labour Force Survey
0.6
0.8
1
1.2
1.4
1.6
Feb 2015 Sep 2015 Apr 2016 Nov 2016
Part-Time Employment, 24% growth (NSW 8%)
Full-Time Employment, 5% growth (NSW 3%)
Source: Department of Employment, SALM; HRF Centre.
%
Employment growth from February 2015, Hunter Balance

NSW – underemployment trending up
Under-employment ratio, NSW
Source: ABS, Labour Force Survey
4.0
6.0
8.0
10.0
12.0
2000 2003 2006 2009 2012 2015
Males Females

Residential market, downward pressure
Median house prices

New housing approvals, plateau lower level
New building approvals (houses)

Construction pipeline, weak
Value building approvals, annualised sum ($m)
0
50
100
150
200
250
DEC JUN DEC JUN DEC JUN DEC JUN DEC
$Millions
2013 2014 2015 20162012
Residential Building Approvals
Non-Residential Building Approvals
Source: ABS Building Approvals; HRF Centre.

HRF Centre’s unique research program for
the Upper Hunter economy is based on
Upper Hunter Pulse Surveys
Last quarter we talked to 300 businesses
and 250 consumers across the Upper Hunter
and this is what they told us.

-0.1
0.0
0.1
0.2
0.3
0.4
DEC 09 DEC 11 DEC 13 DEC 15
Business Confidence
(next 3 months)
Business Confidence
(next 12 months)
Source: HRF Centre’s Upper Hunter Pulse Business Surveys
Business confidence, upbeat
Business Confidence

-0.2
0.0
0.2
0.4
0.6
DEC 09 DEC 10 DEC 11 DEC 12 DEC 13 DEC 14 DEC 15 DEC 16
Trading (next 12 months)
Profitability (next 12 months)
Source: HRF Centre's Upper Hunter Pulse Business Surveys
Forward orders (next 3 months)
Business performance, forward indicators
Business performance, next 12 months

-0.3
-0.2
-0.1
0.0
0.1
0.2
0.3
0.4
Trading (last 3 months)
Forward orders
(last 3 months)
Employment
(last 3 months)
Business performance, past indicators
Business performance, last 3 months

-0.1
0.0
0.1
0.2
Hiring Intentions (next 3 months)
Hiring Intentions (next 12 months)
Sustained labour market recovery
Hiring intentions

Uplift in planned investment
0.0
0.1
0.2
DEC 09 DEC 10 DEC 11 DEC 12 DEC 13 DEC 14 DEC 15 DEC 16
Capital Expenditure, next 12 months

Mining dependence
Upper Hunter Business Mining Dependence,
Industry Average Scores

Consumer sentiment, turn for the better
Consumer spending and confidence

Regional outlook, renewed confidence
12-month regional outlook

Summary: Positive Signs
Upper Hunter economy positive on balance…
– Unemployment rate low and employment steady
– 2016 upward trend in business confidence & outlook
– Consumer sentiment and outlook improving but still
below long-term average
– Renewed confidence in region’s economic outlook
– However median house prices still weak and housing
approvals have plateaued at lower level
– Things to watch in 2017...
– Will the upswing in regional mood & performance be
sustained, or a temporary boost to performance?

Thank you
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HRF Centre Upper Hunter Economic Update May 2017

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