Economic Update February 2020 CONTENTS
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SUPPORTING THE SOUTH AUSTRALIAN BUILDING AND CONSTRUCTION INDUSTRY AND WORKFORCE. Economic Update February 2020 CONTENTS Published 16 March 2020 1. OVERVIEW Contact: [email protected] | 1800 739 839 Positive Indicators 01 5 Greenhill Road, Wayville SA 5034 Negative Indicators 01 2. BUILDING AND CONSTRUCTION INDICATORS Summary of ABS Indicators: South Australia 02 Other Commentary on Building and Construction Indicators: 03 Australian Securities and Investments Commission — Companies Entering External Administration by Industry 03 South Australian Centre for Economic Studies (SACES) Data Wrap 11 February 2020 04 Infrastructure Australia — Infrastructure Priority List February 2020 04 Cordell Construction Monthly February 2020 07 3. EMPLOYMENT AND UNEMPLOYMENT ABS Labour Force Australia, January 2020 — Cat. No. 6202.0 08 Vacancy Report – January 2020, Australian Government Department of Employment, Skills, Small and Family Business 08 South Australian Centre for Economic Studies (SACES) Data Wrap 11 February 2020 09 4. COMMENTARY ON GENERAL ECONOMIC CONDITIONS ABS Retail Trade Data – December 2020, ABS Cat. No. 8501.0 09 Reserve Bank of Australia — Statment on Monetary Policy, February 2020 09 South Australian Centre for Economic Studies (SACES) Data Wrap 11 February 2020 10 ANZ Stateometer — December Quarter 2019 11 Deloitte — Weekly Economic Briefing, 25 February 2020 11 CEDA — Economic and Political Overview 12 Bank SA Business Monitor February 2020 13 ABS GDP/State Final Demand — December Quarter 2019 13 Disclaimer cannot be relied upon. CITB is not responsible consider obtaining independent professional for providing updates on such projections and advice before making any decisions based on Note: these reports will be updated each month, forecasts cannot be relied upon. 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These assumptions may not hold of opinion and projections and forecasts) and true and therefore such projections and forecasts Overview • This month has been dominated by negative economic news triggered by the global outbreak of the coronavirus, resulting in the Reserve Bank of Australia cutting interest rates again in an attempt to stimulate the economy. • Most indicators such as the impact of bushfires, consumer spending, dwelling investment, tourism income and wages point to a continuing slowdown in the economy. • The Australian Construction industry Forum states the following: [There is a] “growing and looming issue of disruption to construction projects, primarily due to a decrease of building products from China due to the coronavirus, and its effect on industrial activity in China. There is also the potential that the migration of skilled labour and professionals needed for the industry could be affected by the coronavirus, with various travel restrictions internationally. Further, if the Australian workforce is affected by the coronavirus with many people infected or staying away from workplaces due to fear of infection, this will also have a major impact on the construction industry. Planning and collaboration for the industry is urgently needed to mitigate these very real possibilities that threaten the construction industry, a major driver of the Australian economy. With more than 60 percent of the $6 billion worth of construction-related materials sourced from China, this represents a massive challenge for the industry if supplies continue to be affected.” • Looking back, the value of construction work done in South Australia was lower in 2019 than in 2018 across all categories. • Looking forward, recently released HIA forecasts are for a shallow recovery over the next few years in the residential sector in South Australia. • Economic growth in South Australia, as measured by State Final Demand, experienced zero growth in 2019. Positive Indicators • Dwelling approvals are marginally higher in South Australia than this time last year, as is the value of non-residential approvals. Negative Indicators • The value of construction work done in 2019 was lower than in 2018 across all categories. • Infrastructure Australia’s newly released Infrastructure Priority List contains no new or High Priority projects for South Australia. • Employment growth has stalled in South Australia (increasing by just 300 in the past 12 months). 1 Building and Construction Indicators Summary of ABS Indicators: South Australia Monthly data (trend) Latest month Compared to Compared to a previous month year earlier Dwelling approvals (November 2019) 946 -3.4% 6.7% • Private houses 677 0.4% -0.6% • Private ‘other’ dwellings 231 -13.2% 16.1% Quarterly data Latest quarter Compared to Compared to a previous quarter year earlier Dwelling commencements (Jun qtr 2019, seas. adj.) 2,470 1.9% -8.8% Construction work done (Sep qtr 2019, chain vol. seas. adj.) $2.8b -5.4% -9.0% • Residential $0.8b 1.5% -6.6% • Non-Residential $0.6b -5.8% -4.3% • Engineering $1.4b -9.1% -12.3% Construction work in the pipeline (Jun qtr 2019, original) $6.5b 2.2% -26.3% • Residential $2.7b 2.4% -2.5% • Non-Residential $2.4b -1.6% -14.2% • Engineering $1.4b -9.3% -57.7% Construction industry employment (Year to Nov qtr 2019) 74,375 na 7.7% Source: ABS data, various publications ABS Building Approvals - December 2019, • The number of private sector houses approved for construction in South Australia rose by 0.4% during January Cat. No. 8731.0 data - Analysis by CITB but was 0.6% lower than a year ago. • The total number of dwelling approvals in South Australia in Private ‘other’ dwelling approvals in South Australia fell by January 2020 was 6.7% higher than a year ago. Conversely, • 13.2% in January but were 16.1% above their level of a year nationally, the number of dwelling approvals was 6.7% lower ago. than a year ago. South Australia Monthly data Latest Compared Table 1: Trend Dwelling Approvals by State (trend) Month to a year Jan 20 v Jan 19 earlier (% change) Dwelling approvals 946 +6.7% (November 2019) NSW -22.0 - Private houses 677 +0.6% VIC +7.3 - Private ‘other’ dwellings1 231 +16.1% QLD -4.4 Non-residential building approvals $162.3m +6.4% SA +6.7 Source: ABS Building Approvals data WA -17.0 TAS -19.4 AUS --6.7 Source: ABS Building Approvals data 1 Other’ dwellings includes semi-detached, town houses, units, and multi-storey apartments. 2 The value of renovation approvals in South Australia During January, the value of non-residential building fell b 2.3% during Januar but was 1.8% higher than approvals fell b 14% in South Australia, but was a year ago. Nationally, the value of renovation 6.4% higher than a ear earlier—see hart approvals rose 0.3% in January but was 2.7% lower Nationally, the value of non-residential building BUILDING APPROVALS than a earJanuary earlier—see hart 2020 3. approvals rose b 0.4% during Januar, to be 10% higher than a year ago. SUMMARY Chart 1: Total Number of Dwelling Approvals Chart 2: South Australian Non-Residential CHART 1: TOTAL NUMBERCHART : APPROVALSOF DWELLING OR TERATIONS & CHART 4: OUTH AUSTRALIAN ON- Per Month BuildingsRESIDENTIAL Approved BUILDINGS $M per PPROVED month - During January 2020, the number of new APPROVALS PERADDITIONS MONTH —$M. P ONTH 2,400 90 24,000 900 $M. P MONTH dwellings approved: 400 AUSTRALIA (RHS) AUSALIA RHS fell by 3.4% in South Australia in trend terms (nationally, new dwelling approvals rose 0.5%); 2,000 20,000 and 300 60 600 fell by 11% in South Australia in seasonally adjusted terms (nationally, new dwelling 1,600 16,000 approvals fell 15%). 200 SOUTH AUSTRALIA (LHS) FURTHER ANALYSIS 1,200 30 12,000 300 SUTH AUSRALIA LHS 100 TREND DATA 800 8,000 The total number of dwelling approvals in South TREND TREND TREND SASNALLY ADJUSD SASNALLY ADJUSD Australia in January 2020 was 6.7% higher than a 0 SEASONALLY0 ADJUSTED 0 year ago. Nationally, the number of dwelling 400 4,000 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 approvals was 6.7% lower than a year ago – see Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Chart 1 and Table 1.