Australia | Jun 18 2010
By Chris Shaw
The construction sector is now Australia's third largest employer, having passed the manufacturing sector for the first time. Just over one million workers are employed in the Australian construction sector, which compares to just over 1.2 million health care and social assistance workers and 1.18 million retail trade employees.
CommSec chief economist Craig James notes a decade ago manufacturing employed 400,000 more workers than the construction sector, but Australia's population growth and an increase in China-driven projects have seen construction enjoy strong growth in the ensuing years.
For the three months to the end of May, Australian employment growth grew by 92,200 jobs in total, a result James notes was well above the 5-year average for jobs growth of 53,500. The transport sector provided the greatest proportion of new jobs in this period, followed by the postal and warehousing sectors.
Construction jobs in the period rose by 25,700, which compares to a fall of 30,200 in the manufacturing sector. Jobs in the wholesale trade sector fell by 24,600 in the three months to the end of May.
Over the past year the mining sector has led the way with job growth of a very strong 18% in percentage terms, while in number of positions created the leaders were the professional, scientific and technical services sectors, followed by the accommodation and food services sectors.
In James's view, the jobs growth result suggests the Global Financial Crisis is now in the past, allowing the mining, construction and transport sectors to return to being the key drivers of the Australian economy.
As evidence of this, James notes mining sector employment growth has averaged 10% annually over the past eight years, while over the same period the utilities sector has seen 6% annual jobs growth.
Given the importance of the mining sector, James suggests the Federal Government needs to quickly reach an agreement with the mining industry with respect to the proposed resources rent tax, or run the risk of seeing growth stagnate in the sector.
Such a stagnation would have implications elsewhere, as James points out expansion in the mining sector is a key fundamental in terms of delivering jobs growth in the construction and transport sectors as well.
The lack of jobs growth in the retail sector is also a concern in James's view, as over the past three months only 6,000 retail jobs have been added. In annual terms this means jobs growth in the sector is negative, a trend that has been in place for almost two years.
Additional data out today show wages secured under new enterprise agreements rose by just 0.4% over the December quarter. This measure has risen by 3.6% over the past year. Private sector wages for the same periods are up 0.2% and 3.7% respectively.
James suggests the strength of the job market has the potential to boost wage growth and as a result inflation, but at present wage pressures remain restrained. This has allowed the Reserve Bank of Australia to move to the sidelines with respect to interest rates.
