Economic Update April 2020

SUPPORTING THE SOUTH AUSTRALIAN BUILDING AND CONSTRUCTION INDUSTRY AND WORKFORCE

Note See Disclaimer on last page

These reports will be updated each month reflecting data and analysis that was released in that month Note that this data may in fact relate to activity some months prior depending on the data collection methodology and timing

This report provides commentary on data up to 6 May 2020 Every effort will be made to also incorporate data released between that date and the date of CITBrsquos May Board meeting

Please refer all queries in respect of this publication to Eric Parnis Manager Research CITB (08) 8172 9509 email ericpcitborgau

Published 12 May 2020 Contact citbcitborgau | (08) 8172 9500 78 Richmond Road Keswick SA 5035

SUMMARY 01

Contents

IMPACT ON THE ECONOMY AND South Australian Centre for Economic Studies ON BUILDING AND CONSTRUCTION OF Data Wrap 14 April 2020 02 COVID-19 mdash SUMMARY OF REPORTS InDaily mdash A World of Pain SA spiralling towards double-digit unemployment mdash Thursday 9 2020 02 International Monetary Fune World Economic Outlook 03 Deloitte Weekly Economic Briefing (14 April) 03 Deloitte Weekly Economic Briefing (5 May) 04 Reserve Bank of Australia mdash An Economic Update Speech 21 April 04 Deloitte Media Release 29 April 05 Civil Construction COVID-19 Members Survey 05

BUILDING AND CONSTRUCTION Summary of ABS Indicators - South Australia 07 INDICATORS ABS Building Approvals mdash March 2020 07 ABS Building Activity Done mdash December Quarter 2020 08 Construction Work Done and Construction Work in the Pipeline mdash December Quarter 2020 09 Other Commentary on Building and Construction Indicators Australian Securities and Investments Commission Companies Entering External Administration by by Industry 09 ANZProperty Council Survey mdash June Quarter 2020 10 Cordell Construction Monthly March 2020 12 RLB Crane Index 12

EMPLOYMENT AND UNEMPLOYMENT ABS Labour Force mdash March 2020 Cat No 62020 13 Vacancy Report mdash February 2020 Australian Government 13 Weekly Payroll Wages and Jobs in Australia 14 ANZ Job Advertisement Series mdash April 2020 14

COMMENTARY ON GENERAL ABS Retail Trade mdash March 2020 ABS Cat No 85010 15 ECONOMIC CONDITIONS CommSec State of the State mdash April 2020 16 (VARIOUS ANALYSIS) Notes 17

Summary

There was a plethora of data commentary and forecasts released in April aiming to estimate the likely impact of COVID-19 on the building and construction industry It is very evident that like most other sectors construction is experiencing stress and a decline in activityComing into the COVID-19 environment the South Australian economy was already fragile As this report shows the unemployment rate was already the highest of all states and after a few years of solid construction activity construction work done and in the pipeline finished 2019 well below 2018 (especially for civil construction) More recently building approvals in South Australia are at the lowest level in 4 yearsWhile South Australiarsquos population growth is relatively low it is highly reliant on net overseas migration which is likely to experience significant declines over 2020-21 due to overseas travel restrictionsThe MBA and HIA have updated their industry forecasts in light of COVID-19 and both are projecting that dwelling starts will experience significant falls in 2020-21 There remains significant uncertainty around the forecasts and the outlook for the sector

1 1

Impact on the Economy and on Building and Construction of COVID-19 mdash Summary of Reports

South Australian Centre for Economic Studies Data Wrap 14 April 2020Business Impacts of COVID-19bull The state national and global economies face the

prospect of significant downturns in the face of various social distancing and other operational restrictions that have been widely implemented over the past month in order to mitigate the spread of coronavirus

bull In order to better understand how COVID-19 has impacted the way businesses operate employ people and their cash flow has changed the ABS has fielded two surveys to measure the business impacts of COVID-19 While the surveys do not provide state level detail they still provide useful information on general business impacts and differences across industries which will generally apply across all states

bull An ABS survey was undertaken from 30 March to 3 April which followed the Australian Governmentrsquos announcement on 29 March 2020 of increased social distancing restrictions and additional business support measures and coincided with the announcement on 30 March of the $130 billion JobKeeper payment program which is designed to ensure that employers stay connected to their employees

bull According to the ABS survey 90 of Australian businesses were still operating in the week commencing 30th March 2020 Of those businesses that were not trading 70 per cent reported that this was due to COVID-19 A large majority of businesses (84 per cent) that had paused trading due to COVID-19 did so due to the introduction of government measures More than 40 per cent of these businesses indicated that a reduction in demand for their products and services was another reason for not trading

bull Industries that involve a high degree of social consumption activity that cannot necessarily be shifted to online delivery have been most affected by the social distancing restrictions Hence those industries which had the lowest proportions of businesses currently operating included lsquoarts and recreation servicesrsquo (47 per cent) lsquoaccommodation and food servicesrsquo (69 per cent) and lsquoretail tradersquo (76 per cent) A relatively low share of businesses in lsquoinformation media and telecommunicationsrsquo were currently operating (65 per cent) which may reflect in part impacts stemming from cut backs in advertising spend

bull Industries which had the highest proportion of businesses still operating in early April included lsquoprofessional scientific and technical servicesrsquo lsquofinancial and insurance servicesrsquo lsquotransport postal and warehousingrsquo and lsquoelectricity gas water and waste servicesrsquo (more than 95 per cent respectively)

bull Almost half (47 per cent) of trading businesses had recently made changes to their workforce due to COVID-19 The most common change was temporarily reducing staff work hours with just over one quarter of trading businesses doing so The next most common responses included placing staff on paid leave (11 per cent) and placing staff on unpaid leave including standing down staff (9 per cent) On the other hand a small proportion of trading

businesses had temporarily increased staff work hours (2 per cent) andor hired additional employees (3 per cent)

bull In terms of operational impacts two-thirds of Australian businesses reported a reduction in turnover or cash flow as a result of COVID-19 while a similar proportion (64 per cent) reported a reduction in demand for their products and services

bull Given the significant government restrictions that have been implemented on businesses operating in the accommodation and food services sector it is unsurprising that almost all businesses in this sector reported a reduction in demand for their goods and services Others industries in which a relatively large proportion of businesses reported reductions in demand included lsquotransport postal and warehousingrsquo lsquoconstructionrsquo and lsquoadministrative and support servicesrsquo

bull Businesses are adapting to the rapidly changing environment by altering their financial arrangements and introducing new products and processes

NAB Business Confidence Index Falls to Record Lowbull Business confidence in Australia as measured by the

National Australia Bankrsquos index of business confidence collapsed in March plunging to -66 points down from -2 points in February The latest result is the lowest on record and well below the low of around -30 points recorded during the Global Financial Crisis

bull The index of business conditions also fell sharply from a net balance of zero in February to -21 points in March which is only a little worse compared to the lows recorded during the GFC Measures of profitability employment and trading all declined sharply

InDaily ldquoA world of painrdquo SA spiralling towards double-digit unemployment ndash Thursday April 9 2020Source InDaily

bull New projections from Deloitte Access Economics offer a balanced view of South Australiarsquos response to the coronavirus crisis but hold a grim warning for a state whose ldquofundamentals remain sketchyrdquo

bull Deloitte has released its quarterly Business Outlook updating a missive sent at the end of March which it now concedes was ldquorushed outrdquo ahead of the Federal Governmentrsquos $130 billion JobKeeper package and successful efforts to ldquoflatten the curverdquo of the coronavirus spread

bull The publication compares economic forecasts of all states and territories with New South Wales as the nationrsquos COVID-19 hotspot unsurprisingly ldquohardest hit by the virusrdquo

bull Deloitte expects South Australia to be the third hardest-hit economy predicting Gross State Product to decline in the latter part of the current financial year before a sharp 69 per cent drop in 2020-21

bull It predicts a sharp rise in unemployment with South Australia already holding the highest jobless rate SOURCE DELOITTE ACCESS ECONOMICS BUSINESS OUTLOOK

in the nation at 58 per cent for February ndash before the coronavirus pandemic hit the economy

bull The paper predicts unemployment to rise to 81 per cent this year and peak at 108 per cent in 2020-21

bull While it expects a gradual decline in the jobless rate for the three years thereafter it doesnrsquot expect it to return to its most recent levels before at least 2024-25

bull In general Deloitte argues states are more at risk in the current climate if they have ldquoan above average number of cases bigger populations and denser city scapes an older or more indigenous population or a greater concentration of workers in at risk occupations and industriesrdquo

bull They are at less at risk if they have significantly cut discretionary travel have a bigger-than-average state stimulus response or ldquoa greater ability to sell industrial inputs to world marketsrdquo

bull While it argues the Marshall Government has been ldquodoing its partrdquo with ldquosignificantrdquo stimulus spending and ldquoproactivelyrdquo imposing border controls in line with other states ldquolonger-term the statersquos fundamentals remain sketchyrdquo

bull South Australiarsquos economic performance is forecast to fall below State Bank era levels

International Monetary Fund ndash World Economic Outlookbull The International Monetary Fund has warned that the

global growth is headed for its worst performance since the Great Depression with a new forecast predicting the world economy will contract by 3 percent in 2020

bull The forecast in its World Economic Outlook took into account the weeks of shuttered factories quarantines and national lockdowns in response to the coronavirus pandemic that have caused economic output around the world to collapse

bull This yearrsquos fall in output would be far more severe than the last recession when the world economy contracted by less than 1 percent between 2008 and 2009 A 3 percent decline in global output would be the worst since the Great Depression the fund said

Deloitte Access Economics ndash Weekly Economic Briefing 14 April 2020bull In just one month the federal government has introduced three

economic ldquorescue packagesrdquo designed to blunt the worst of the COVID-19-induced blows to our economy ndash and each has rightly been industry-agnostic focussing on keeping as many businesses and employees as possible on life support

bull As the shutdown continues economic malaise will certainly start to extend to one of the largest construction and real estate

bull The first big hit to the sector has already come as many individuals and businesses now cannot pay their rent or mortgage And as the housing market has all but vanished for the time being in the face of movement restrictions rising unemployment and economic uncertainty selling these assets has limited prospects

bull We are seeing some piecemeal support here from banks to mortgage holders through a moratorium on evictions and now in the form of rent assistance for some households

bull The second wave for the property sector from COVID-19 - and the more consequential for the economy as a whole - is likely to hit construction which accounts for 17 of all Australian businesses There is still a reasonable pipeline of activity and no restrictions on access to sites

bull However ABS business survey data suggests that 6 of the sector has already ceased operating and activity could quickly diminish in the face of barriers to credit supply chain issues and loss of confidence There are also longer term housing demand issues in the face of restrictions on migration which is a large driver of overall growth in the economy and the construction sector in particular

Chart 1 SA Output and Demand (change on year earlier)

3 3 2

Note See Disclaimer on last page

These reports will be updated each month reflecting data and analysis that was released in that month Note that this data may in fact relate to activity some months prior depending on the data collection methodology and timing

This report provides commentary on data up to 6 May 2020 Every effort will be made to also incorporate data released between that date and the date of CITBrsquos May Board meeting

Please refer all queries in respect of this publication to Eric Parnis Manager Research CITB (08) 8172 9509 email ericpcitborgau

Published 12 May 2020 Contact citbcitborgau | (08) 8172 9500 78 Richmond Road Keswick SA 5035

SUMMARY 01

Contents

IMPACT ON THE ECONOMY AND South Australian Centre for Economic Studies ON BUILDING AND CONSTRUCTION OF Data Wrap 14 April 2020 02 COVID-19 mdash SUMMARY OF REPORTS InDaily mdash A World of Pain SA spiralling towards double-digit unemployment mdash Thursday 9 2020 02 International Monetary Fune World Economic Outlook 03 Deloitte Weekly Economic Briefing (14 April) 03 Deloitte Weekly Economic Briefing (5 May) 04 Reserve Bank of Australia mdash An Economic Update Speech 21 April 04 Deloitte Media Release 29 April 05 Civil Construction COVID-19 Members Survey 05

BUILDING AND CONSTRUCTION Summary of ABS Indicators - South Australia 07 INDICATORS ABS Building Approvals mdash March 2020 07 ABS Building Activity Done mdash December Quarter 2020 08 Construction Work Done and Construction Work in the Pipeline mdash December Quarter 2020 09 Other Commentary on Building and Construction Indicators Australian Securities and Investments Commission Companies Entering External Administration by by Industry 09 ANZProperty Council Survey mdash June Quarter 2020 10 Cordell Construction Monthly March 2020 12 RLB Crane Index 12

EMPLOYMENT AND UNEMPLOYMENT ABS Labour Force mdash March 2020 Cat No 62020 13 Vacancy Report mdash February 2020 Australian Government 13 Weekly Payroll Wages and Jobs in Australia 14 ANZ Job Advertisement Series mdash April 2020 14

COMMENTARY ON GENERAL ABS Retail Trade mdash March 2020 ABS Cat No 85010 15 ECONOMIC CONDITIONS CommSec State of the State mdash April 2020 16 (VARIOUS ANALYSIS) Notes 17

Summary

There was a plethora of data commentary and forecasts released in April aiming to estimate the likely impact of COVID-19 on the building and construction industry It is very evident that like most other sectors construction is experiencing stress and a decline in activityComing into the COVID-19 environment the South Australian economy was already fragile As this report shows the unemployment rate was already the highest of all states and after a few years of solid construction activity construction work done and in the pipeline finished 2019 well below 2018 (especially for civil construction) More recently building approvals in South Australia are at the lowest level in 4 yearsWhile South Australiarsquos population growth is relatively low it is highly reliant on net overseas migration which is likely to experience significant declines over 2020-21 due to overseas travel restrictionsThe MBA and HIA have updated their industry forecasts in light of COVID-19 and both are projecting that dwelling starts will experience significant falls in 2020-21 There remains significant uncertainty around the forecasts and the outlook for the sector

1 1

Impact on the Economy and on Building and Construction of COVID-19 mdash Summary of Reports

South Australian Centre for Economic Studies Data Wrap 14 April 2020Business Impacts of COVID-19bull The state national and global economies face the

prospect of significant downturns in the face of various social distancing and other operational restrictions that have been widely implemented over the past month in order to mitigate the spread of coronavirus

bull In order to better understand how COVID-19 has impacted the way businesses operate employ people and their cash flow has changed the ABS has fielded two surveys to measure the business impacts of COVID-19 While the surveys do not provide state level detail they still provide useful information on general business impacts and differences across industries which will generally apply across all states

bull An ABS survey was undertaken from 30 March to 3 April which followed the Australian Governmentrsquos announcement on 29 March 2020 of increased social distancing restrictions and additional business support measures and coincided with the announcement on 30 March of the $130 billion JobKeeper payment program which is designed to ensure that employers stay connected to their employees

bull According to the ABS survey 90 of Australian businesses were still operating in the week commencing 30th March 2020 Of those businesses that were not trading 70 per cent reported that this was due to COVID-19 A large majority of businesses (84 per cent) that had paused trading due to COVID-19 did so due to the introduction of government measures More than 40 per cent of these businesses indicated that a reduction in demand for their products and services was another reason for not trading

bull Industries that involve a high degree of social consumption activity that cannot necessarily be shifted to online delivery have been most affected by the social distancing restrictions Hence those industries which had the lowest proportions of businesses currently operating included lsquoarts and recreation servicesrsquo (47 per cent) lsquoaccommodation and food servicesrsquo (69 per cent) and lsquoretail tradersquo (76 per cent) A relatively low share of businesses in lsquoinformation media and telecommunicationsrsquo were currently operating (65 per cent) which may reflect in part impacts stemming from cut backs in advertising spend

bull Industries which had the highest proportion of businesses still operating in early April included lsquoprofessional scientific and technical servicesrsquo lsquofinancial and insurance servicesrsquo lsquotransport postal and warehousingrsquo and lsquoelectricity gas water and waste servicesrsquo (more than 95 per cent respectively)

bull Almost half (47 per cent) of trading businesses had recently made changes to their workforce due to COVID-19 The most common change was temporarily reducing staff work hours with just over one quarter of trading businesses doing so The next most common responses included placing staff on paid leave (11 per cent) and placing staff on unpaid leave including standing down staff (9 per cent) On the other hand a small proportion of trading

businesses had temporarily increased staff work hours (2 per cent) andor hired additional employees (3 per cent)

bull In terms of operational impacts two-thirds of Australian businesses reported a reduction in turnover or cash flow as a result of COVID-19 while a similar proportion (64 per cent) reported a reduction in demand for their products and services

bull Given the significant government restrictions that have been implemented on businesses operating in the accommodation and food services sector it is unsurprising that almost all businesses in this sector reported a reduction in demand for their goods and services Others industries in which a relatively large proportion of businesses reported reductions in demand included lsquotransport postal and warehousingrsquo lsquoconstructionrsquo and lsquoadministrative and support servicesrsquo

bull Businesses are adapting to the rapidly changing environment by altering their financial arrangements and introducing new products and processes

NAB Business Confidence Index Falls to Record Lowbull Business confidence in Australia as measured by the

National Australia Bankrsquos index of business confidence collapsed in March plunging to -66 points down from -2 points in February The latest result is the lowest on record and well below the low of around -30 points recorded during the Global Financial Crisis

bull The index of business conditions also fell sharply from a net balance of zero in February to -21 points in March which is only a little worse compared to the lows recorded during the GFC Measures of profitability employment and trading all declined sharply

InDaily ldquoA world of painrdquo SA spiralling towards double-digit unemployment ndash Thursday April 9 2020Source InDaily

bull New projections from Deloitte Access Economics offer a balanced view of South Australiarsquos response to the coronavirus crisis but hold a grim warning for a state whose ldquofundamentals remain sketchyrdquo

bull Deloitte has released its quarterly Business Outlook updating a missive sent at the end of March which it now concedes was ldquorushed outrdquo ahead of the Federal Governmentrsquos $130 billion JobKeeper package and successful efforts to ldquoflatten the curverdquo of the coronavirus spread

bull The publication compares economic forecasts of all states and territories with New South Wales as the nationrsquos COVID-19 hotspot unsurprisingly ldquohardest hit by the virusrdquo

bull Deloitte expects South Australia to be the third hardest-hit economy predicting Gross State Product to decline in the latter part of the current financial year before a sharp 69 per cent drop in 2020-21

bull It predicts a sharp rise in unemployment with South Australia already holding the highest jobless rate SOURCE DELOITTE ACCESS ECONOMICS BUSINESS OUTLOOK

in the nation at 58 per cent for February ndash before the coronavirus pandemic hit the economy

bull The paper predicts unemployment to rise to 81 per cent this year and peak at 108 per cent in 2020-21

bull While it expects a gradual decline in the jobless rate for the three years thereafter it doesnrsquot expect it to return to its most recent levels before at least 2024-25

bull In general Deloitte argues states are more at risk in the current climate if they have ldquoan above average number of cases bigger populations and denser city scapes an older or more indigenous population or a greater concentration of workers in at risk occupations and industriesrdquo

bull They are at less at risk if they have significantly cut discretionary travel have a bigger-than-average state stimulus response or ldquoa greater ability to sell industrial inputs to world marketsrdquo

bull While it argues the Marshall Government has been ldquodoing its partrdquo with ldquosignificantrdquo stimulus spending and ldquoproactivelyrdquo imposing border controls in line with other states ldquolonger-term the statersquos fundamentals remain sketchyrdquo

bull South Australiarsquos economic performance is forecast to fall below State Bank era levels

International Monetary Fund ndash World Economic Outlookbull The International Monetary Fund has warned that the

global growth is headed for its worst performance since the Great Depression with a new forecast predicting the world economy will contract by 3 percent in 2020

bull The forecast in its World Economic Outlook took into account the weeks of shuttered factories quarantines and national lockdowns in response to the coronavirus pandemic that have caused economic output around the world to collapse

bull This yearrsquos fall in output would be far more severe than the last recession when the world economy contracted by less than 1 percent between 2008 and 2009 A 3 percent decline in global output would be the worst since the Great Depression the fund said

Deloitte Access Economics ndash Weekly Economic Briefing 14 April 2020bull In just one month the federal government has introduced three

economic ldquorescue packagesrdquo designed to blunt the worst of the COVID-19-induced blows to our economy ndash and each has rightly been industry-agnostic focussing on keeping as many businesses and employees as possible on life support

bull As the shutdown continues economic malaise will certainly start to extend to one of the largest construction and real estate

bull The first big hit to the sector has already come as many individuals and businesses now cannot pay their rent or mortgage And as the housing market has all but vanished for the time being in the face of movement restrictions rising unemployment and economic uncertainty selling these assets has limited prospects

bull We are seeing some piecemeal support here from banks to mortgage holders through a moratorium on evictions and now in the form of rent assistance for some households

bull The second wave for the property sector from COVID-19 - and the more consequential for the economy as a whole - is likely to hit construction which accounts for 17 of all Australian businesses There is still a reasonable pipeline of activity and no restrictions on access to sites

bull However ABS business survey data suggests that 6 of the sector has already ceased operating and activity could quickly diminish in the face of barriers to credit supply chain issues and loss of confidence There are also longer term housing demand issues in the face of restrictions on migration which is a large driver of overall growth in the economy and the construction sector in particular

Chart 1 SA Output and Demand (change on year earlier)

3 3 2

Impact on the Economy and on Building and Construction of COVID-19 mdash Summary of Reports

South Australian Centre for Economic Studies Data Wrap 14 April 2020Business Impacts of COVID-19bull The state national and global economies face the

prospect of significant downturns in the face of various social distancing and other operational restrictions that have been widely implemented over the past month in order to mitigate the spread of coronavirus

bull In order to better understand how COVID-19 has impacted the way businesses operate employ people and their cash flow has changed the ABS has fielded two surveys to measure the business impacts of COVID-19 While the surveys do not provide state level detail they still provide useful information on general business impacts and differences across industries which will generally apply across all states

bull An ABS survey was undertaken from 30 March to 3 April which followed the Australian Governmentrsquos announcement on 29 March 2020 of increased social distancing restrictions and additional business support measures and coincided with the announcement on 30 March of the $130 billion JobKeeper payment program which is designed to ensure that employers stay connected to their employees

bull According to the ABS survey 90 of Australian businesses were still operating in the week commencing 30th March 2020 Of those businesses that were not trading 70 per cent reported that this was due to COVID-19 A large majority of businesses (84 per cent) that had paused trading due to COVID-19 did so due to the introduction of government measures More than 40 per cent of these businesses indicated that a reduction in demand for their products and services was another reason for not trading

bull Industries that involve a high degree of social consumption activity that cannot necessarily be shifted to online delivery have been most affected by the social distancing restrictions Hence those industries which had the lowest proportions of businesses currently operating included lsquoarts and recreation servicesrsquo (47 per cent) lsquoaccommodation and food servicesrsquo (69 per cent) and lsquoretail tradersquo (76 per cent) A relatively low share of businesses in lsquoinformation media and telecommunicationsrsquo were currently operating (65 per cent) which may reflect in part impacts stemming from cut backs in advertising spend

bull Industries which had the highest proportion of businesses still operating in early April included lsquoprofessional scientific and technical servicesrsquo lsquofinancial and insurance servicesrsquo lsquotransport postal and warehousingrsquo and lsquoelectricity gas water and waste servicesrsquo (more than 95 per cent respectively)

bull Almost half (47 per cent) of trading businesses had recently made changes to their workforce due to COVID-19 The most common change was temporarily reducing staff work hours with just over one quarter of trading businesses doing so The next most common responses included placing staff on paid leave (11 per cent) and placing staff on unpaid leave including standing down staff (9 per cent) On the other hand a small proportion of trading

businesses had temporarily increased staff work hours (2 per cent) andor hired additional employees (3 per cent)

bull In terms of operational impacts two-thirds of Australian businesses reported a reduction in turnover or cash flow as a result of COVID-19 while a similar proportion (64 per cent) reported a reduction in demand for their products and services

bull Given the significant government restrictions that have been implemented on businesses operating in the accommodation and food services sector it is unsurprising that almost all businesses in this sector reported a reduction in demand for their goods and services Others industries in which a relatively large proportion of businesses reported reductions in demand included lsquotransport postal and warehousingrsquo lsquoconstructionrsquo and lsquoadministrative and support servicesrsquo

bull Businesses are adapting to the rapidly changing environment by altering their financial arrangements and introducing new products and processes

NAB Business Confidence Index Falls to Record Lowbull Business confidence in Australia as measured by the

National Australia Bankrsquos index of business confidence collapsed in March plunging to -66 points down from -2 points in February The latest result is the lowest on record and well below the low of around -30 points recorded during the Global Financial Crisis

bull The index of business conditions also fell sharply from a net balance of zero in February to -21 points in March which is only a little worse compared to the lows recorded during the GFC Measures of profitability employment and trading all declined sharply

InDaily ldquoA world of painrdquo SA spiralling towards double-digit unemployment ndash Thursday April 9 2020Source InDaily

bull New projections from Deloitte Access Economics offer a balanced view of South Australiarsquos response to the coronavirus crisis but hold a grim warning for a state whose ldquofundamentals remain sketchyrdquo

bull Deloitte has released its quarterly Business Outlook updating a missive sent at the end of March which it now concedes was ldquorushed outrdquo ahead of the Federal Governmentrsquos $130 billion JobKeeper package and successful efforts to ldquoflatten the curverdquo of the coronavirus spread

bull The publication compares economic forecasts of all states and territories with New South Wales as the nationrsquos COVID-19 hotspot unsurprisingly ldquohardest hit by the virusrdquo

bull Deloitte expects South Australia to be the third hardest-hit economy predicting Gross State Product to decline in the latter part of the current financial year before a sharp 69 per cent drop in 2020-21

bull It predicts a sharp rise in unemployment with South Australia already holding the highest jobless rate SOURCE DELOITTE ACCESS ECONOMICS BUSINESS OUTLOOK

in the nation at 58 per cent for February ndash before the coronavirus pandemic hit the economy

bull The paper predicts unemployment to rise to 81 per cent this year and peak at 108 per cent in 2020-21

bull While it expects a gradual decline in the jobless rate for the three years thereafter it doesnrsquot expect it to return to its most recent levels before at least 2024-25

bull In general Deloitte argues states are more at risk in the current climate if they have ldquoan above average number of cases bigger populations and denser city scapes an older or more indigenous population or a greater concentration of workers in at risk occupations and industriesrdquo

bull They are at less at risk if they have significantly cut discretionary travel have a bigger-than-average state stimulus response or ldquoa greater ability to sell industrial inputs to world marketsrdquo

bull While it argues the Marshall Government has been ldquodoing its partrdquo with ldquosignificantrdquo stimulus spending and ldquoproactivelyrdquo imposing border controls in line with other states ldquolonger-term the statersquos fundamentals remain sketchyrdquo

bull South Australiarsquos economic performance is forecast to fall below State Bank era levels

International Monetary Fund ndash World Economic Outlookbull The International Monetary Fund has warned that the

global growth is headed for its worst performance since the Great Depression with a new forecast predicting the world economy will contract by 3 percent in 2020

bull The forecast in its World Economic Outlook took into account the weeks of shuttered factories quarantines and national lockdowns in response to the coronavirus pandemic that have caused economic output around the world to collapse

bull This yearrsquos fall in output would be far more severe than the last recession when the world economy contracted by less than 1 percent between 2008 and 2009 A 3 percent decline in global output would be the worst since the Great Depression the fund said

Deloitte Access Economics ndash Weekly Economic Briefing 14 April 2020bull In just one month the federal government has introduced three

economic ldquorescue packagesrdquo designed to blunt the worst of the COVID-19-induced blows to our economy ndash and each has rightly been industry-agnostic focussing on keeping as many businesses and employees as possible on life support

bull As the shutdown continues economic malaise will certainly start to extend to one of the largest construction and real estate

bull The first big hit to the sector has already come as many individuals and businesses now cannot pay their rent or mortgage And as the housing market has all but vanished for the time being in the face of movement restrictions rising unemployment and economic uncertainty selling these assets has limited prospects

bull We are seeing some piecemeal support here from banks to mortgage holders through a moratorium on evictions and now in the form of rent assistance for some households

bull The second wave for the property sector from COVID-19 - and the more consequential for the economy as a whole - is likely to hit construction which accounts for 17 of all Australian businesses There is still a reasonable pipeline of activity and no restrictions on access to sites

bull However ABS business survey data suggests that 6 of the sector has already ceased operating and activity could quickly diminish in the face of barriers to credit supply chain issues and loss of confidence There are also longer term housing demand issues in the face of restrictions on migration which is a large driver of overall growth in the economy and the construction sector in particular

Chart 1 SA Output and Demand (change on year earlier)

3 3 2

Deloitte Access Economics ndash Weekly Economic Briefing 5 May 2020Payroll data released today reveals that employment continued to decline across all states and territories in the week ending 18 April Between mid-March and mid-April employee jobs fell by 75 (around 975000 workers) and total wages paid dropped 82 nationally

In the next two months 72 of firms expect to be hurt by lower cash flows and 69 anticipate pain from reduced demand for goods and services

61 of Australian businesses have registered or intend to register for JobKeeker The sectors with the highest proportion of applicants are construction (80) administrative and support services (79) which includes travel agencies gardeners and cleaners and accommodation and food services (76)

Reserve Bank of Australia ndash An Economic and Financial Update - Speech 21 April 2020Source Reserve Bank of Australiabull The result of both the restrictions and the uncertainty is

that over the first half of 2020 we are likely to experience the biggest contraction in national output and income that we have witnessed since the 1930s

bull Putting precise numbers on the magnitude of this contraction is difficult but RBArsquos current thinking is national output is likely to fall by around 10 per cent over the first half of 2020 with most of this decline taking place in the June quarter

bull Total hours worked in Australia are likely to decline by around 20 per cent over the first half of this year

bull The unemployment rate is likely to be around 10 per cent by June although the RBA is hopeful that it might be lower than this if businesses are able to retain their employees on lower hours The unemployment rate would have been much higher than this without the governmentrsquos JobKeeper wage subsidy

Deloitte ndash Media Release - COVID-19 Australiarsquos $60bn income pain 29 April 2020bull COVID-19 is carving a path through the incomes of

Australians In the four months from the start of April ndash the likely deepest period of pain ndash lost wages and profits are set to be almost $60 billion And thatrsquos even after allowing for the extraordinary support to families and businesses that has been rolled out by the Federal Government

bull The pain of lost incomes isnrsquot equally distributed Not surprisingly the deeper the lockdown impacts the deeper the income losses

bull Construction is open for business Governments ndash federal state and local ndash are trying hard to speed up or add to the construction projects that theyrsquore financing But a bunch of private sector projects are slowing and some projects are being put on hold as businesses reassess the need to build

Civil Contractors Federation National COVID-19 Member Surveybull In order to gauge the current impact that COVID-19 is having

on civil construction businesses and to address the challenges they face CCF National undertook a nationwide CCF National COVID-19 Member Survey of the civil construction industry

bull Respondents were asked to provide an indication of the impact of COVID-19 on their business The results indicate that more than 80 of respondent businesses have experienced a minor or moderate impact reinforcing that the industry at large is in a strong position and remains lsquoopen for businessrsquo

Chart 2 Job losses by industry (14 March ndash 18 April 2020)

Chart 3 Billions of $s in lost wages amp profits due to COVID 1 April to 31 July 2020 - Australia

bull In terms of inflation the RBA is also expecting a significant decline in the June quarter The large fall in oil prices combined with the introduction of free childcare and the deferral or reduction in some price increases mean that it is quite likely that year-ended headline inflation will turn negative in June If so this would be the first time since the early 1960s that the price level has fallen over a full year

bull One plausible scenario is that the various restrictions begin to be progressively lessened as we get closer to the middle of the year and are mostly removed by late in the year except perhaps the restrictions on international travel

bull Under this scenario we could expect the economy to begin its bounce-back in the September quarter and for that bounce-back to strengthen from there

bull If this is how things play out the economy could be expected to grow very strongly next year with GDP growth of perhaps 6ndash7 per cent after a fall of around 6 per cent this year

bull There is though quite a lot of uncertainty around the numbers with the exact profile of the recovery depending not only upon when the restrictions are lifted but also on the resolution of the uncertainty that people feel about the future

bull It is harder to make forecasts about the unemployment rate given the uncertainty about how many employees will remain attached to their firm and whether people who are stood down will be looking for employment and thus be counted as unemployed But it is likely that the unemployment rate will remain above 6 per cent over the next couple of years

bull With many firms delaying or cancelling wage increases year-ended wage growth is expected to decline to below 2 per cent before gradually picking up again In underlying terms inflation is expected to remain below 2 per cent over the next couple of years

SOURCE DELOITTE

5 5 4

Building and Construction Indicators

Summary of ABS Indicators South Australia

1 Otherrsquo dwellings includes semi-detached town houses units and multi-storey apartments

ABS Building Approvals - March 2020 Cat No 87310 data - Analysis by CITB

bull The total number of dwelling approvals in South Australia in March 2020 was 66 lower than a year ago Conversely nationally the number of dwelling approvals was 10 higher than a year ago

bull The number of dwelling approvals in South Australia is at its lowest level since May 2015

bull The number of private sector houses approved for construction in South Australia was down 14 in March and 53 lower than a year ago

bull Private lsquootherrsquo dwelling approvals in South Australia fell by 139 in March and were also 139 lower than their level of a year ago

SOURCE ABS DATA VARIOUS PUBLICATIONS

Table 1 Trend Dwelling Approvals by State

SOURCE ABS BUILDING APPROVALS DATA

SOURCE ABS BUILDING APPROVALS DATA

Monthly data (trend) Latest month Compared to previous month

Compared to a year earlier

Dwelling approvals (March 2020) 846 -49 30

bull Private houses 648 -14 -07

bull Private lsquootherrsquo dwellings 180 -139 -139

Quarterly data Latest quarter Compared to previous quarter

Compared to a year earlier

Dwelling commencements (Dec qtr 2019 seas adj) 3030 103 200

Construction work done (Dec qtr 2019 chain vol seas adj) $28b -54 -90

bull Residential $08b 15 -66

bull Non-Residential $06b -58 -43

bull Engineering $14b -91 -123

Construction work in the pipeline (Jun qtr 2019 original) $64b -09 -269

bull Residential $28b 11 -04

bull Non-Residential $26b 64 -22

bull Engineering $11b -187 -634

Construction industry employment (Year to Feb qtr 2020) 73928 na 37

Mar 20 v Mar19 ( change)

NSW -26

VIC +186

QLD -78

SA -66

WA -140

TAS +15

AUS -+10

Monthly data (trend) Latest Month

Compared to a year

earlier

Dwelling approvals (March 2020) 846 -66

- Private houses 648 -53 - Private lsquootherrsquo dwellings1 180 -139

Non-residential building approvals $1812m +77

Chart 4 COVID-19 Business Impact

Chart 5 Major Types of Impacts

SOURCE CCF

SOURCE CCF

bull The Survey shows the industry has significant capacity to tender for additional infrastructure projects particularly in the $0-10 million threshold

7 7 6

Chart 6 Total Number of Dwelling Approvals Per Month

4000

8000

12000

16000

20000

24000

400

800

1200

1600

2000

2400

Jan-

00

Jan-

00

Jan-

00

Feb-

00

Feb-

00

Mar

-00

SOUTH AUSTRALIA (LHS)

AUSTRALIA (RHS)

TRENDSEASONALLY ADJUSTED

SOURCE ABS BUILDING APPROVALS DATA

bull During March the value of non-residential building approvals fell slightly (by 01) in South Australia but were up 77 through the year

Chart 7 South Australian Non-Residential Buildings Approved $M per month

SOURCE ABS BUILDING APPROVALS DATA

0

100

200

300

400

Jan-

00

Jan-

00

Jan-

00

Feb-

00

Feb-

00

Mar

-00

TRENDSEASONALLY ADJUSTED

Table 2 Companies Entering External Administration

Construction SA All industries SA Construction Aust of SA total SA of Aus construction

2013-14 64 393 1802 163 36

2014-15 47 362 1591 130 30

2015-16 55 386 1647 142 33

2016-17 39 311 1509 125 26

2017-18 57 341 1354 167 42

2018-19 52 347 1515 150 34

Jul-Feb YTD 37 210 1140 176 32

ABS Building Activity Australia ndash December Quarter 2019 Cat No 87520 data ndash Analysis by CITB

Chart 8 Quarterly Dwelling Unit Commencements

10

20

30

40

50

60

70

1

2

3

4

5

6

7

Dec

-09

Dec

-11

Dec

-13

Dec

-15

Dec

-17

Dec

-19

AUSTRALIA (RHS)

TRENDSEASONALLY ADJUSTED

SOUTH AUSTRALIA (LHS)

1000

2000

3000

4000

333

666

999

1332

4023

8

4096

9

4169

9

4243

0

4316

0

4389

1

Dwelling approvals (monthly trend LHS)

Dwelling Commencements(quarterly seas adj RHS)

SOURCE ABS DATA

bull During the December quarter 2019 the number of dwelling unit commencements in seasonally adjusted terms rose 10 in South Australia to be 20 higher than a year earlier (nationally dwelling unit commencements rose 12 but were 15 lower than a year earlier)

bull This was the highest annual growth of all states

Chart 9 South Australian Dwelling Approvals and Commencements

10

20

30

40

50

60

70

1

2

3

4

5

6

7

Dec

-09

Dec

-11

Dec

-13

Dec

-15

Dec

-17

Dec

-19

AUSTRALIA (RHS)

TRENDSEASONALLY ADJUSTED

SOUTH AUSTRALIA (LHS)

1000

2000

3000

4000

333

666

999

1332

4023

8

4096

9

4169

9

4243

0

4316

0

4389

1

Dwelling approvals (monthly trend LHS)

Dwelling Commencements(quarterly seas adj RHS)

SOURCE ABS BUILDING ACTIVITY DATA

Chart 10 Construction Work Done in the Quarter South Australia ($billion seas adj)

Residential

Non-Residential

Total

Engineering

0

2

4

6

8

10

12

Dec-

09

Dec-

10

Dec-

11

Dec-

12

Dec-

13

Dec-

14

Dec-

15

Dec-

16

Dec-

17

Dec-

18

Dec-

19

SOURCE ABS BUILDING ACTIVITY DATA

SOURCE ABS BUILDING ACTIVITY DATA

Australian Securities and Investments Commission ndash Companies Entering External Administration by IndustrySource Australian Securities and Investments Commissionbull The table below summarises the data for construction in

South Australia by comparing it to all industries in South Australia and to construction nationally Insolvencies in construction were actually lower in 2018-19 than in 2017-18 and are well below the number in 2013-14 On average the construction sector makes up around 18 of all insolvencies in South Australia which is well above its employment or Gross State Product share (around 8)

Residential

Non-Residential

Engineering

Total

00

05

10

15

20

25

30

35

40

Dec-

09

Dec-

10

Dec-

11

Dec-

12

Dec-

13

Dec-

14

Dec-

15

Dec-

16

Dec-

17

Dec-

18

Dec-

19

Chart 11 Construction Work in the Pipeline South Australia ($billion original)

SOURCE ASIC

Other Commentary on Building and Construction Indicators

9 9 8

Chart 6 Total Number of Dwelling Approvals Per Month

4000

8000

12000

16000

20000

24000

400

800

1200

1600

2000

2400

Jan-

00

Jan-

00

Jan-

00

Feb-

00

Feb-

00

Mar

-00

SOUTH AUSTRALIA (LHS)

AUSTRALIA (RHS)

TRENDSEASONALLY ADJUSTED

SOURCE ABS BUILDING APPROVALS DATA

bull During March the value of non-residential building approvals fell slightly (by 01) in South Australia but were up 77 through the year

Chart 7 South Australian Non-Residential Buildings Approved $M per month

SOURCE ABS BUILDING APPROVALS DATA

0

100

200

300

400

Jan-

00

Jan-

00

Jan-

00

Feb-

00

Feb-

00

Mar

-00

TRENDSEASONALLY ADJUSTED

Table 2 Companies Entering External Administration

Construction SA All industries SA Construction Aust of SA total SA of Aus construction

2013-14 64 393 1802 163 36

2014-15 47 362 1591 130 30

2015-16 55 386 1647 142 33

2016-17 39 311 1509 125 26

2017-18 57 341 1354 167 42

2018-19 52 347 1515 150 34

Jul-Feb YTD 37 210 1140 176 32

ABS Building Activity Australia ndash December Quarter 2019 Cat No 87520 data ndash Analysis by CITB

Chart 8 Quarterly Dwelling Unit Commencements

10

20

30

40

50

60

70

1

2

3

4

5

6

7

Dec

-09

Dec

-11

Dec

-13

Dec

-15

Dec

-17

Dec

-19

AUSTRALIA (RHS)

TRENDSEASONALLY ADJUSTED

SOUTH AUSTRALIA (LHS)

1000

2000

3000

4000

333

666

999

1332

4023

8

4096

9

4169

9

4243

0

4316

0

4389

1

Dwelling approvals (monthly trend LHS)

Dwelling Commencements(quarterly seas adj RHS)

SOURCE ABS DATA

bull During the December quarter 2019 the number of dwelling unit commencements in seasonally adjusted terms rose 10 in South Australia to be 20 higher than a year earlier (nationally dwelling unit commencements rose 12 but were 15 lower than a year earlier)

bull This was the highest annual growth of all states

Chart 9 South Australian Dwelling Approvals and Commencements

10

20

30

40

50

60

70

1

2

3

4

5

6

7

Dec

-09

Dec

-11

Dec

-13

Dec

-15

Dec

-17

Dec

-19

AUSTRALIA (RHS)

TRENDSEASONALLY ADJUSTED

SOUTH AUSTRALIA (LHS)

1000

2000

3000

4000

333

666

999

1332

4023

8

4096

9

4169

9

4243

0

4316

0

4389

1

Dwelling approvals (monthly trend LHS)

Dwelling Commencements(quarterly seas adj RHS)

SOURCE ABS BUILDING ACTIVITY DATA

Chart 10 Construction Work Done in the Quarter South Australia ($billion seas adj)

Residential

Non-Residential

Total

Engineering

0

2

4

6

8

10

12

Dec-

09

Dec-

10

Dec-

11

Dec-

12

Dec-

13

Dec-

14

Dec-

15

Dec-

16

Dec-

17

Dec-

18

Dec-

19

SOURCE ABS BUILDING ACTIVITY DATA

SOURCE ABS BUILDING ACTIVITY DATA

Australian Securities and Investments Commission ndash Companies Entering External Administration by IndustrySource Australian Securities and Investments Commissionbull The table below summarises the data for construction in

South Australia by comparing it to all industries in South Australia and to construction nationally Insolvencies in construction were actually lower in 2018-19 than in 2017-18 and are well below the number in 2013-14 On average the construction sector makes up around 18 of all insolvencies in South Australia which is well above its employment or Gross State Product share (around 8)

Residential

Non-Residential

Engineering

Total

00

05

10

15

20

25

30

35

40

Dec-

09

Dec-

10

Dec-

11

Dec-

12

Dec-

13

Dec-

14

Dec-

15

Dec-

16

Dec-

17

Dec-

18

Dec-

19

Chart 11 Construction Work in the Pipeline South Australia ($billion original)

SOURCE ASIC

Other Commentary on Building and Construction Indicators

9 9 8

ANZ-Property Council Survey ndash June Quarter 2020Source Property Council of Australia

bull The ANZ-Property Council Survey for the June quarter shows a deterioration in sentiment across Australiarsquos property sectors In the wake of the coronavirus outbreak and the associated shutdown of economic activity sentiment towards residential property and all sectors of commercial property declined sharply

bull In answer to new questions specially set for this survey it found that expectations of a negative impact from the coronavirus were broadly based and similar across the states Nationwide virtually all respondents expect to be negatively impacted by the pandemic with all states recording similar responses 10 of businesses report that the impact is already so serious it is affecting their viability

bull A large majority of firms reported that the virus was already impacting current construction schedules Firms expect the impact of the virus to be largest on the tourism sector

bull In the residential sector price expectations have turned around sharply and a net 36 of respondents now expect house prices to decline over the next year Employment in the sector is also expected to decline but the outlook for construction activity is more balanced

bull The outlook for the residential sector is negative across all states and territories

bull In commercial property across all sectors and states sentiment declined sharply Confidence in the tourism and retail sectors was the weakest but sentiment also declined sharply in the office and industrial sectors

bull The construction sector is not subject to a shut-down at present but the downturn in the outlook is concerning and suggests that the impact of the virus may be more long lasting on the property sector With long lags associated with construction approvals commencements and completions a quick rebound once the lockdown is eased seems unlikely

bull Nationwide nearly 100 of respondents expect a negative impact from the coronavirus with all states recording similar responses 35 report that the virus and measures to contain it were already having a serious impact 10 feel that the impact is so serious it is affecting the viability of their business and 52 expect the impact to be serious or very serious

Source ANZProperty Council

31

34

36

26

35

33

34

41

32

28

30

30

34

31

28

34

36

44

35

33

35

0 20 40 60 80 100

ACT

NSW

QLD

SA

VIC

WA

AUS

COVID-19 expectations index

COVID-19 current impactsCURRENTLY what impact is the coronavirus (COVID-19) outbreak having on your business

Slight Impact Moderate Impact Serious Impact

Page 9

bull According to the Survey statewide confidence in South Australia sits at 60 for the June 2020 quarter dropping 57 points since last quarter The survey includes responses from property industry professionals from South Australia and across the country A score of 100 is considered neutral

bull The national average score is currently 62 which is the lowest confidence on record Importantly South Australia recorded the lowest quarterly drop in the country

Chart 12 Anticipated impact of the pandemic on business in the next quarter

SOURCE ANZ PROPERTY COUNCIL

Table 3 ANZ-Property Council Confidence Index ndash states and territories

SOURCE ANZ PROPERTY COUNCIL

Chart 13 COVID-19 mdash current impacts Currently what impact is the coronavirus (COVID-19) outbreak having on your business

SOURCE ANZ PROPERTY COUNCIL

11 11 10

Core Logic - Cordell Construction Monthly ndash March 2020bull Planning for numerous school upgrades is underway

in preparation for the Year 7 to high school initiative whereby Year 7 public school students will be taught in high school from term 1 2022

bull A development application has been submitted for a $32 million upgrade of Unley high School Designed by Thomson Rossi Associates the upgrade will include a new three storey building for flexible learning including art science home economics technology and classroom spaces refurbishment of existing spaces and new courtyard and covered outdoor learning area Works are scheduled for completion before 2022 prior to the commencement of Year 7s at the school

bull Tenders have been invited for Hallett Cove School Transportable buildings will be removed some with asbestos and replaced with contemporary facilities refurbishment of existing learning areas including specialised learning areas for science technology engineering and maths

bull A consortium comprising CPB Contractors Aurecon and GHD has been awarded the tender to deliver three major projects under the Port Wakefield to Port Augusta Regional Projects Alliance (RPA) The three projects are the Port Wakefield Overpass and Highway Duplication the Joy Baluch AM Bridge Duplication and the Augusta Highway planning project between Port Augusta and Port Wakefield

bull Tenders have been invited for main works for the $149 million Yatala Labour Prison which will contain 270 high security beds Early works comprising car park business centre and staff training and wellbeing centre are being carried out by Sarah Constructions and are due for completion towards the end of the year

emsp

RLB Crane Index Q1 2020Source Rider Levett Bucknallbull The COVID-19 pandemic impact will be felt in next

edition of the index The implications as to delays in the commencement of proposed projects may be known by the next edition of the index in Quarter 3 2020

bull Adelaidersquos RLB Crane Indexreg fell from the last editionrsquos record high of 317 to 250 a fall of 21 The fall resulted from of seven cranes being removed from projects and three new commencements

bull Building work done in South Australia for the 2019 calendar year fell 6 from 2018 levels Total building work done of $59 billion in Chain Volume Measure terms was the second highest level of activity since 2010 only bettered by the decade high in 2018 of $63 billion

bull The decline in activity was evident across Adelaide where cranes numbers fell to 15 down from 19 in Quarter 3 2019

bull Residential sector cranes fell by three to now number seven Cranes were removed from Realm East End Adelaidian Spence

on Light and 252 South Terrace These developments will add important new stock to the apartment supply within the city

bull New residential projects commencing include developments on Toms Court and Penney Place

bull The crane was removed at the Her Majestyrsquos Theatre redevelopment within the civic sector

bull Within the commercial sector both cranes remain on 102 Wakefield Street and Lot 14 North Terrace Hotel cranes remain at four with cranes on The Hotel Indigo the Majestic Hotel Student accommodation at 124 Waymouth Street and Sofitel Luminesque Hotel on Currie Street

Chart 14 RBL Crane Index Adelaide

Chart 15 RBL Crane Activity Adelaide

Employment and Unemployment

ABS Labour Force Australia March 2020 ndash Cat No 62020 (analysis from Department of Treasury and Finance)Note the data covers a labour force survey undertaken in the first two weeks of March before the COVID-19 restrictions were implemented Therefore the impact of these restrictions will start appearing in the April data

Chart 16 Unemployment Rates ()

bull During March the unemployment rate was 60 in South Australia in trend terms and 62 in seasonally adjusted terms (52 nationally)

bull South Australia has the highest unemployment rate of all the states

bull Through the year trend employment growth was down 01 for South Australia but up 18 nationally

bull South Australiarsquos labour force participation rate has fallen by 06 percentage points over the past year compared to a rise nationally of 02 percentage points

bull Underemployed workers are those who are employed part-time and who want (and are available for more hours of work than they currently have The trend underemployment rate in South Australia was 99 in March As a result the overall trend labour force underutilisation rate was 159 in March up from 147 a year earlier (nationally the rate is 139)

Vacancy Report ndash March 2020 Australian Government Department of Employment Skills Small and Family BusinessSource Australian Government

In trend terms the Internet Vacancy Index (IVI) fell significantly nationally by 53 (or 7700 job advertisements) in March 2020 reflecting the onset of the economic downturn stemming from the COVID-19 pandemic

Over the year this fall was more pronounced with job advertisements down by 227 (40300) The IVI now stands at an all-time series low of 137100

This is the record monthly decline for the seasonally adjusted series surpassing the 105 (22900) fall during the GFC in January 2009

Nationally vacancies for construction trades workers has declined by 237 through the year

South Australia experienced a decrease of 186 in vacancies over the past year

Chart 17 IVI Annual Change by StateTerritory ()

SOURCE CHART REPRODUCED FROM DEPARTMENT OF TREASURY AND FINANCE ECONOMIC BRIEFS

13 13 12

Weekly Payroll Jobs and Wages in Australia Week ending 18 April 2020 ABS Cat No 6160055001bull Total jobs numbers are 75 down Australia-wide and 78 in

South Australia This is not the same as the unemployment rate but it does indicate that the next release of this key indicator could see our unemployment rate approximately double to around 10-11 ndash though JobKeeper may trim this a bit

bull Construction jobs are down 64 nationally

Chart 18 Changes in Employee jobs by industry since March 14 2020

ANZ Job Advertisement Series ndash April 2020

Source ANZbull In seasonally adjusted terms ANZ Australian Job Ads

fell 531 month on month in April to be down 622 year on year nationally In trend terms job ads declined 112 month on month and 339 year on year

Chart 19 Nationally ANZ Job Ads fell 531 in April

SOURCE SEEK DEPARTMENT OF EDUCATION SKILLS AND EMPLOYMENT ANZ RESEARCH

Commentary on General Economic Conditions

ABS Retail Trade Data ndash March 2020 ABS Cat No 85010 (analysis by Department of Treasury and Finance)bull Due to the impacts of COVID-19 on retail trade the ABS

has suspended the trend series from February 2020

bull During March nominal retail turnover in South Australia rose by a massive 94 after rising by 04 the previous month in seasonally adjusted terms (nationally nominal retail turnover rose 85)

bull Compared with a year earlier nominal retail turnover was 10 higher in South Australia and also 10 nationally

bull Through the year to March retail turnover for food increased by 25 in South Australia

CommSec ndash State of the States Report ndash April 2020Source CommSecbull Victoria remains the best performing economy

but now shares top spot with Tasmania

bull South Australia is now in fifth position on the performance rankings

bull South Australia is second-ranked on three of the economic indicators - relative population growth equipment investment and dwelling starts

bull South Australia remains in fourth position with construction work 33 per cent above decade averages

bull In terms of annual growth rates all economies had construction work lower than a year ago except Tasmania (up 12 per cent)

Chart 20 Through Year Growth in Real Retail Turnover ndash Seasonally Adjusted

Chart 21 Relative Performance for Construction Work Done

15 15 14

bull Tasmania is strongest on the relative population measure with its 100 per cent annual population growth rate 723 per cent above the decade-average rate

bull South Australia is now next strongest on relative population growth up 25 per cent on the decade average followed by Queensland (up 18 per cent)

bull In trend terms dwelling starts in Tasmania were 207 per cent above the decade-average followed by South Australia (up 78 per cent)

Chart 22 Relative Performance for Dwelling Starts

DISCLAIMER

This publication has been produced for general information only and is not intended to constitute advice Readers relying on the content of the publication do so entirely at their own risk

No warranty (express or implied) is given as to the accuracy or completeness of information provided The information may be true and correct at the date of publication but this may change after publication The CITB is not responsible for providing updates on such information

All projections and forecasts are based on assumptions These assumptions may not hold true and therefore such projections and forecasts cannot be relied upon The CITB is not responsible for providing updates on such projections and forecasts cannot be relied upon

All statements of opinion by the CITB represent the subjective views of the CITB and the CITB gives no warranty that such statements are correct The publication may include statements of opinion by third parties which do not necessarily reflect the opinion of the CITB

All links to third party websites and references to third parties are included for convenience only and do not constitute endorsement of the material on those sites or endorsement of the relevant third parties and their product or service

Readers should make their own assessment of all information provided (including statements of opinion and projections and forecasts) and consider obtaining independent professional advice before making any decisions based on such information

In no event is the CITB (or its trustees officers employees or any related body corporate) liable for any liability loss risk or damage (including incidental or consequential damages) incurred or suffered (directly or indirectly) out of the use of any information contained in this publication whether based on contract tort or other legal action

Copyright in the publication belongs or is licensed to the CITB and no part of this publication may be used reproduced or copied without the CITBrsquos consent

Notes

17 17 16

THE FUTURE IS YOURS TO BUILD

THE FUTURE IS YOURS TO BUILD