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Australian professionals fill hole dug by mining slowdown
[SYDNEY] As Australia's cooling mining sector lays off workers, an army of white-collar professionals is more than filling the employment gap, courtesy of a housing sector stoked by record low interest rates.
In the year to February, 99,000 net new positions were created in the professional, scientific and technical services sector, a category stuffed with architects, engineers and lawyers.
That's twice as many as were lost to mining, which shed almost a fifth of its workers over the year.
The professional sector now employs a record 987,800 people, more than manufacturing and the fourth-biggest employer overall, official data released last month showed. "The home-building boom is serving to lift a raft of boats,"said Craig James, chief economist at CommSec.
In 2014, new home starts hit a record of nearly 200,000, official data showed. "Architects, carpenters, building material suppliers, hardware and homemaker stores are just some of the areas benefiting from the building boom," said James.
Sydney-based Luigi Rosselli Architects, which expanded its team by 10-20 per cent in the past year, is among the beneficiaries. "Now the work just comes in by emails and telephone. Before, you had to be much more proactive," Rosselli, who counts Chinese investors, bankers, doctors and lawyers among his clients, told Reuters. "The worst bit was around 2009. Then we had around 25-30 projects at a time. Now we've got 40-45 projects going. The value of work that we were working at the time was around A$40 million (US$31 million). Now we're close to the A$90-$100 million mark."
Led by unprecedented approvals for high-rise apartments, housing construction activity is expected to hit a fresh high in 2015, analysts at ANZ said, adding annual housing starts should top out at 210,000 dwellings this year. "Moreover, high-rise apartment construction lags are likely to sustain construction activity for longer than previous cycles," said David Cannington, senior economist at ANZ.
The employment figures for professionals, due to be updated in June, look likely to improve after the latest data showed a surprising pick-up in overall jobs growth in March and upward revisions to the previous month.
In March, the unemployment rate fell back to 6.1 per cent from a revised 6.2 per cent. It has been ranging between 5.9 and 6.3 per cent over the past year, defying predictions of a deteriorating labour market.
That is in part because mining, though struggling, is a small employer overall, accounting for just 1.8 per cent of the country's workers even though it accounts for around 10 per cent of gross domestic product.
All of which is welcome news to the Reserve Bank of Australia, which was able to eschew a cut in interest rates this month.
Even so, markets expect the central bank will deliver another 50 basis points of easing over the coming year, taking the cash rate from 2.25 per cent to new record lows, as employers are not fully embracing the "animal spirits" that RBA governor Glenn Stevens has repeatedly urged. "I am a little more cautious in taking on staff after being very badly burnt in the (global financial crisis)," said Justin Loe, director of architectural firm Bayview Design Group in Sydney, who currently has four people in his team. "However, I am looking for staff. We are getting busier," he said.