The latest Herron Todd White Cairns Watch report released on Monday reveals what pretty much everyone already knows: the Cairns economy is full of contradictions and mixed signals. The November report highlights the city’s strange mix of economic indicators.
Gavin King digs into the latest report to find out what’s going on in the local economy, in his following report featured at cairnsnow.com.au:
Herron Todd White data analyst Rick Carr is accustomed to making sense out of numbers.
But even this experienced numbers man appears to be having trouble making heads or tails out of the latest figures for Cairns.
On the one hand, the city’s economic fundamentals appear solid and – in some segments – on the way up.
According to the Cairns Watch report for November, airport passenger numbers are up 4.5% over the past 12 months, led by a remarkable trend increase of 20.3% in international arrivals since October last year.
Hotels are benefiting from the airport’s boom. The average Cairns accommodation occupancy trend stood at 67.3% in June 2015, compared to 58.6% back in June 2009. Room rates (the average daily revenue per room occupied) is also rising, albeit coming off a low base.
The rise in the real estate market isn’t as impressive as the tourism industry’s buoyant trend lines, but it is steadily improving. According to Mr Carr’s latest analysis, the Cairns median house price has maintained a mildly increasing trend in recent months, coming in at $409,500 in September 2015. That’s a trend rise of 4.7% over the latest 12 months. The median trend price for units is up even more, increasing by 5.2% over the past 12 months.
But the good news on the latest local data front ends rather abruptly there.
Chief among the concerns is the unemployment rate, which now sits at 9% on a trend basis. That’s 0.8% higher than a year ago. That percentage rise may not be huge in real terms, but in the world of employment statistics, 0.8% is significant enough to ring alarm bells. Perhaps most puzzling – and troubling – is the “increasing divergence relative to the State average.”
In other words, while the statewide unemployment rate is steady and experiencing slight reductions, the Cairns unemployment rate is going in the opposite direction. In fact, there were fewer people employed in Cairns (106,100) last month than there were 12 months ago in October 2014, resulting in a 0.6% drop.
That weak jobs performance matches the fall in building approvals. The latest Cairns Watch report notes: “Building approvals have eased off over the last twelve months and have moved into decline in both actual trend and stylised (trend-in-the-trend) terms.”
That’s a 5.8% drop in building approvals over the latest twelve months.
So what does this topsy turvy economic data tell us about the state of the economy in Cairns? Well, there are some positive takeouts from the latest Cairns Watch report.
Carr predicts that economic confidence in Cairns will improve. He expects building approvals to increase and airport arrivals to continue to grow, particularly at the international terminal with new or extra services set to commence to Manila, Auckland, and Hong Kong, as well as the boost from charter flights for the upcoming Chinese New Year period.
As Cairns Watch report author Rick Carr sums up: “The economy is stepping in the right direction, but there is still much to happen to reach vibrancy.”
There have been occasional flickers of economic vibrancy – and a few fireworks shows – since the city started to recover from the global financial year in about 2009.
The region’s collective breath remains on hold waiting for action on the Aquis proposal, still the main game in town.
But there is a growing sense that other projects such as the $2 billion Pacific Patrol Boat Replacement Program, the Mt Emerald Wind Farm and a range of council projects such as the performing arts centre redevelopment will be enough to reach the level of economic vibrancy.