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Today’s labour force survey figures showed little impact from COVID-19 restrictions. Among the other topics we explore in today’s expansive Data Wrap include consumer confidence, home lending activity, merchandise exports, retail sales, and employment within the renewable energy sector.

South Australian labour market in a weak state before social distancing restrictions
Results from the March labour force survey, , showed little impact resulting from COVID-19. This outcome was expected since the March data are based on labour market outcomes recorded for the first two weeks of the month (i.e. 1 to 14 March), which predates the introduction of major social distancing measures. Social restrictions implemented during the reference period largely focused on international travel restrictions for select countries, whereas did not come into effect until 23 March.

The lack of any initial significant impact is illustrated by data on hours worked. Trend monthly hours worked for South Australia actually rose by 0.1 per cent in March, while the corresponding national figure was unchanged. One would expect any initial impact to show up in hours worked since the immediate response of any employer would be to change hours worked by staff, with those organisations impacted by operational restrictions reducing hours worked.

Despite the limited impact from COVID-19, the latest labour market results are not particularly encouraging from a South Australian perspective. Notwithstanding a small improvement in March, employment levels have been stagnant over the last six months after falling through the winter-spring period of last year. The net effect of these movements was that total employment in South Australia in March 2020 was 0.1 per cent lower compared to a year earlier. In comparison, every other state or territory recorded increases in their employment levels over the past year, with New South Wales reporting the weakest rise (up 0.9 per cent).

In spite of the lack of employment growth over the past year, South Australia’s trend unemployment rate has remained unchanged at 6.0 per cent. As we have noted in recent Data Wraps, this outcome is explained by people leaving the workforce, which may in part reflect people having difficulty finding jobs. The state’s labour force participation fell by 0.6 percentage points to 62.6 per cent through the year to March 2020. In contrast, the national participation rate rose by 0.2 percentage points to 66.0 per cent over this period and remains just below its record high.

South Australia’s trend unemployment rate of 6.0 per cent compares with a national unemployment rate of 5.2 per cent. Moreover, South Australia had the highest trend unemployment rate of any state or territory in March, with the next highest unemployment rates being in Queensland (5.7 per cent), the Northern Territory (5.5 per cent), and Western Australia (5.4 per cent). These regions were followed by Tasmania (5.3 per cent), Victoria (5.2 per cent) and New South Wales (4.7 per cent).

Consumer confidence plunges
Consumer confidence in Australia has followed business confidence in plunging in response to the emergence of the coronavirus pandemic and implementation of widespread shutdown measures. The Westpac-Melbourne Institute Index of Consumer Sentiment fell by 17.7 per cent to 75.6 in April, which represents the largest decline in the forty-seven year history of the survey. With this decline consumer sentiment as measured by the index is now well below long-run average levels, and has in fact fallen to around the lows reached .

One silver lining in the latest survey is that the deterioration in consumer sentiment has been restricted to near term economic conditions, with expectations regarding the economic outlook over the next five years generally holding up well.

Home lending activity stable before the impact of COVID-19
Lending activity with respect to the South Australian housing market showed little change in February after showing a solid recovery over the previous year, data released by the shows. The total value of loans to households for owner-occupier housing, in trend terms, fell by 0.2 per cent in February 2020, but was still up 4.6 per cent compared to a year earlier. In comparison, loans at the national level rose by 0.6 per cent in February and were up 20 per cent through the year. The strong rise in national loan commitments over the past year largely reflects a natural bounce back after national lending activity fell sharply through 2018-19.

Loans to owner-occupiers for new home construction – i.e. construction of homes or purchase of newly erected dwellings – provides insight into recent and future residential building activity. The total number of loans for new home construction in South Australia in the three months to February 2020 were up 18 per cent compared to the corresponding period a year earlier. New loan commitments for new home construction were actually up even more strongly in value terms between these periods (34 per cent), which points to some compositional changes in the types of residential buildings that are being constructed.

South Australian goods exports have weakened considerably
South Australia’s overseas goods exports have fallen sharply over the last year. Data released by the shows that the total value of overseas merchandise exports in the 12 months to February 2020 were 8.8 per cent ($1.1 billion) lower compared to the corresponding period a year earlier. In comparison, the value of goods exports for Australia actually rose by 10 per cent ($35.2 billion), thanks chiefly to a large rise in exports for Western Australia (up 20 per cent or $30 billion). In fact, South Australia recorded the weakest result of any state or territory over the period considered, with Tasmania recording the next weakest performance (down 5.8 per cent).

The poor performance of South Australian overseas goods exports over the past year was due to a deterioration in performance across various commodities. Comparing the 12 months to February 2020 with the previous 12 months, there were significant declines in the value of exports of mineral fuels, lubricants and related materials (down $445 million), lead (down $244 million), wheat exports (down $202 million), and machinery and transport equipment (down $131 million).

South Australian retail sales grow broadly in line with national sales
ABS data published at the beginning of April showed growing broadly in line with national retail sales during the month of February. In seasonally adjusted terms South Australian retail turnover rose by 0.4 per cent in February, while national retail turnover increased by 0.5 per cent.

Although the February retail sales data predates the imposition of social distancing measures in Australia, the ABS noted that some retailers observed changes resulting from COVID-19, including an increase in demand for food and related grocery items, reduced spending on discretionary forms of spending, and negative impacts for businesses that are highly oriented towards tourism.

Employment in renewable energy activities
Renewable energy has been an important source of investment and, to a lesser degree, employment formation over recent years. The latest ABS publication on provides insight into how employment has evolved within the sector over much of the last decade.

The ABS estimates that there were 2,560 full-time equivalent jobs in respect of renewable energy activities in South Australia in 2018-19. This represents an increase of 83 per cent since 2009-10. In comparison, full-time equivalent (FTE) employment in renewable energy activities for Australia rose by 121 per cent over this period to 26,850 FTE jobs. South Australia's recent share of national renewable energy jobs (9.5 per cent) was higher relative to the state's share of total national employment (6.6 per cent).

Solar energy, which includes roof-top solar photovoltaic (PV), solar hot water systems and large scale solar, is the highest contributor to renewable energy employment in Australia, accounting for approximately two-thirds of FTE employment, followed by wind (12 per cent), hydro (11 per cent) and biomass (5.9 per cent). There are naturally large variations in the distribution of employment across renewable energy activities between the states. In South Australia, solar activities (75 per cent) and wind (21 per cent) account for relatively higher proportions of total FTE employment in renewable energy activities.

Approximately 27 per cent of suitable private dwellings in Australia were outfitted with roof-top solar PV in December 2019. South Australia was estimated to have an above national average uptake (38 per cent), with only Queensland (39 per cent) reporting a higher level of adoption.

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