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Economics | August 6, 2020

Record fall in tourism jobs Commercial sector supports building outlook Tourism data; Building approvals Tourism: The number of filled jobs in the tourism industry fell 3.0 per cent between March 2019 and March

2020, while economy-wide filled jobs grew by 1.7 per cent. It was the biggest annual decline in tourism jobs since the series began 15½ years ago. Tourism filled jobs are at 2½-year lows.

Dwelling approvals: In 2019/20, local councils across Australia approved 171,419 residential building applications, down 8.4 per cent on a year ago.

The approvals data has implications for banks, retailers, developers, building and building material companies. The tourism data is important for a raft of sectors such as hotels, airlines, transport operators and retailers.

What does it all mean?

Since December last year, the tourism industry has been hit hard by bushfires and COVID-19. To gauge the impact, the Australian Bureau of Statistics (ABS) has released new tourism labour statistics. So far, the data only covers the period to March, so it doesn’t fully capture the impact on international and domestic border closures. The data releases over time will highlight the scale of the impact on the industries that rely most on domestic and international tourism.

Residential building activity will soften over many parts of Australia in coming months with declines in council building approvals. But the impact on overall building will be supported by commercial building and engineering (roads, tunnels, bridges etc.). NSW is most at risk with a softening of home building. However on the other side of the equation, the drying up of overseas migration will mean that both demand and supply are falling, reducing the downward impact on prices.

What do the figures show? Quarterly Tourism Labour Statistics

The Australian Bureau of Statistics (ABS) have introduced new tourism labour statistics saying that “The extensive bushfires and the COVID-19 pandemic have increased demand for more timely information on tourism activity.”

Key findings:

From March 2019 to March 2020:

tourism filled jobs in Australia decreased by 3.0 per cent (-21,900) compared to an increase of 1.7 per cent (+243,900) in the whole economy

the total number of tourism filled jobs at the end of March was 702,700

the fall in tourism filled jobs of 3.0 per cent was the largest fall in the time series which commenced in September 2004

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Economic Insights. Record fall in tourism jobs

The largest changes in filled jobs were:

Accommodation services: -11,600 filled jobs (-12.4 per cent)

Cafes, restaurants and takeaway food services: -4,700 filled jobs (-2.1 per cent)

Sports and recreation services: -4,500 filled jobs (-15.9 per cent)

The largest falls in filled jobs were by males (-4.2 per cent or 3,900) ahead of females (-2.1 per cent or 8,100).

In the March quarter 2020, tourism jobs fell by 6.2 per cent (March quarter 2019, down 1.4 per cent) while jobs across the whole economy fell by 0.7 per cent (down 0.6 per cent).

Jobs fell the most in the March quarter in Sports and recreation services (down 16.8 per cent); Accommodation (down 12.4 per cent); and Cultural services (down 8.4 per cent). Holding up best was Road transport and transport equipment rental (up 1.4 per cent).

For males, full-time positions fell 3.9 per cent with part time down 6.4 per cent

For females, full-time positions fell 6.4 per cent with part time down 7.8 per cent

Building Approvals: 2019/20

Council approvals to build new homes fell by 8.4 per cent in 2019/20 to 171,419 after falling 19.4 per cent in the previous year. The rolling annual total of approvals stands near the lowest levels in seven years. And approvals are 12.4 per cent down on ‘normal’ – the decade average.

The value of residential approvals fell by 6.1 per cent in 2019/20 with new projects down 6.7 per cent and renovation approvals down 1.4 per cent.

Commercial approvals actually rose by 8.5 per cent in 2019/20. So total building approvals were down just 0.2 per cent over the year.

Over the year to June (2019/20), total building approvals totalled $115.6 billion, 13.7 per cent above the decade average.

In terms of residential approvals in 2019/20, states and territories data showed the following changes: NSW (-17.7 per cent); Victoria (-0.7 per cent); Queensland (-11.5 per cent); South Australia (+9.2 per cent); Western Australia (-6.8 per cent); Tasmania (+0.3 per cent); Northern Territory (-13.1 per cent); ACT (-19.6 per cent).

In terms of commercial building, biggest increases occurred in Agriculture and aquaculture (up 78.3 per cent); Health (up 65.2 per cent); and Entertainment and recreation (up 52.5 per cent).

What is the importance of the economic data?

The Bureau of Statistics' monthly Building Approvals release contains figures on local council approvals to build residential structures such as homes and units as well as commercial premises such as offices and shops. Approval is one of the first stages of the construction ‘pipeline’ and is thus a key leading indicator of future activity. An increase in approvals would point to stronger future activity for construction-related companies.

“The Bureau of Statistics has created an additional quarterly release that will use Labour Account data to produce

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Economic Insights. Record fall in tourism jobs

experimental labour statistics” for the tourism industry.” The ABS says “The extensive bushfires and the COVID-19 pandemic have increased demand for more timely information on tourism activity.”

What are the implications for investors? The full impact of border closures on the tourism sector will only be revealed over time. But more data, and

accurate data across industry sectors and regions will assist government in determining how much more assistance is required for businesses.

Home building was already set to ease in many parts of Australia before COVID-19. But the softening could prove opportune with overseas migration likely to be almost non-existent in 2020.

South Australia and Tasmania stand out as states where the home building outlook is most favourable. Data to be released over the coming days will reveal which regions will hold up best.

Infrastructure, social and industrial building and renovations will be the most active sectors in the coming year, supporting builders, building material, and construction-dependent areas of the economy.

Craig James, Chief Economist, CommSec Twitter: @CommSec