Australia has been on a hiring surge over the past 12 months, adding an impressive 230,000 jobs. And most of those have arrived in the last month.
It’s been quite a turnaround to what was seen last year, and fits with alternate labour market indicators such as job ads, vacancy levels and various measures from the National Australia Bank, Westpac and the Ai Group released in recent months.
However, while in absolute terms employment growth is revving up, the acceleration masks a widely divergent performance across individual sectors in Australia.
Some industries are hiring aggressively while others are firing.
Nothing demonstrates that better than the chart below from the Commonwealth Bank.
Using data released in the ABS’ detailed labour force report for May, released earlier this week, it shows the total employment change by sector over the past 12 months.
It really tells a story about which industries are doing well, and those which are not. It also provides a guide for those about to enter the workforce, or who are considering a career change, as to where they’re likely to find work in the years ahead.
According to the ABS, employment growth in professional services soared by 62,000 over the past 12 months. That outpaced equally impressive gains in accommodation which grew by 43,000, as well as education (42,000), healthcare (33,000) and construction (22,000).
They’re largely services-orientated, a sector that already employees around two-thirds of all Australians.
Michael Workman, senior economist at the Commonwealth Bank, suggests that the growth in services is not only being driven by local demand, but also from abroad given the slide in the Australian dollar in recent years.
“A considerable amount of new demand for our services sectors is not local,” he says. “Foreign demand for our services, like tourism, education and health, continues to grow at reasonably brisk rates.”
With record numbers of short-term visitors and foreign students studying in Australia, it’s hard to disagree that it’s been a factor in spurring on employment growth in services.
The good news is that Workman expects that trend will continue, presuming the Australian dollar doesn’t “complicate” Australia’s economic transition as the RBA has previously warned.
“We expect that to continue, especially if the AUD stays between 70 to 75 cents, in coming years,” he says.
However, while Australia’s tourism, healthcare and education sectors are benefiting from the lower Australian dollar and increased wealth across the Asian region, not every industry is doing well from this surge in foreign demand.
Take the retail sector, the second-largest employer in Australia behind healthcare, as a prime example.
Employment in retail fell by 20,000 over the past year, providing it the unwanted title as the largest “firer” of all sectors monitored.
A combination of weak household income growth, increased levels of indebtedness, fierce levels of competition and an increasing preference by Australians towards consumer experiences rather than goods has clearly had an impact.
That’s seen total employment in Australia slide close to two percentage points over the past decade, displaced by jobs in the healthcare, professional services and accommodation sectors.
Given the trend in the chart above, fuelled by ageing demographics and increased wealth across the Asian region, among other factors, it’s clear where the jobs are likely to be found in the future, and which skill sets will be required.