Poor performance on jobless front doesn't match up for State

Thursday, 10 December 2015

South Australia’s unemployment levels are running contrary to other economic indicators for the State, which suggest improved but slow economic performance overall, according to a new University of Adelaide report released today.

The State Government has recently revised its employment expectations in the Midyear Budget Review, cutting the forecast of jobs growth from 1% this financial year to 0.25%.

“There are some mixed signals coming from the State economy recently, with labour market data painting a much more grim picture than other macroeconomic indicators,” says the University’s Associate Professor Michael O’Neil, Executive Director of the South Australian Centre for Economic Studies (SACES) and co-author of the latest Economic Briefing report to be delivered today.

“The economy picked up speed in 2014-15, with Gross State Product (GSP) rising by 1.6% compared to 0.8% in 2013-14, but we did not see a commensurate improvement in employment conditions. Nonetheless, the economy is still growing below its long-term trend, and the outlook is for continued subdued growth.

“Positive signs include solid growth in household and public sector consumption expenditure. Residential construction in South Australia has also been quite strong over the past year.

“We’ve forecast overall employment to increase modestly over the next three years, roughly in line with the gradual increase in the State’s population,” Associate Professor O’Neil says.

The report also shows that the total volume of South Australia’s overseas exports fell by 6.6% in 2014-15, a consequence of lower mining exports, but volumes of goods and services exports were recovering through the middle of this year.

“We anticipate the strongest growth in exports in the near future to come from agriculture and education,” Associate Professor O’Neil says.

Co-author Steve Whetton, Deputy Director of SACES, says GSP will continue to increase but at a slower pace over the next two years.  “We expect this growth will be weighed down by the job losses and other structural adjustments in manufacturing, as well as further reductions in the value of mineral exports,” he says.

“The unemployment rate should decline over the next two years, which would be welcome news for South Australia. However, we expect this to occur largely due to a fall in the participation rate, as some workers displaced by structural changes in the manufacturing and mining sectors exit the labour force. Such structural changes have seen a significant deterioration in employment outcomes for males recently.”

The full report will be delivered at the SACES Economic Briefing in Adelaide today (Thursday 10 December). The report will include a focus article – Underlying causes of the weak global recovery – that explores the factors contributing to sluggish economic recovery since the Global Financial Crisis.

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