NEWCASTLE is witnessing a “massive” commercial building boom with a growth rate at almost five times the State average.
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The latest quarterly economic indicators from the Hunter Research Foundation show the value of non-residential investment rose by 44 per cent over the year to June, compared to the dramatically lower growth rate of 9 per cent recorded in NSW.
HRF senior research fellow Dr Anthea Bill said much of the investment aligned with the Baird government’s proposed light rail system and Wickham transport interchange, and the investment was likely largely from the private sector.
“I think it’s fair to say we are having a construction boom in the CBD and we know there are employment benefits from that.”
Dr Bill said it was important that further investment followed from State coffers to ensure “continuing and lasting change” in Newcastle.
The HRF indicators revealed that business profitability in the June quarter was at its highest level since December 2009, and significantly higher than values recorded in 2014, with companies reporting positive forward forwards and trading performances.
Data showed that 40 per cent of businesses rate their profitability over the last 3 months as good or very good compared to 30 per cent at the same time last year.
Offsetting the business profit line is a persistently pessimistic consumer outlook, with confidence worsening from -0.01 in June last year to -0.11 in the same month this year.
“Consumers are still fairly pessimistic about the regional economy in the short term and I think that’s driven by weak income growth and concerns about job security,” Dr Bill said, adding that growth in the share of part-time work had likely also played a role in curbing household spending.
The Hunter’s unemployment rate rose to 5.8 per cent in July, up from a two-and-a-half-year low of 5.4 per cent in April.
However, this was an improvement on the 7.8 per cent jobless rate recorded for the region in July, 2015.
Dr Bill said the 2 per cent growth in jobs had been driven by the health care and social assistance, service and education sectors, and by a rise in the number of people working part time.
“Even though the labour market is looking good, a lot of that has come from the rise in part time work but many people may be working less hours than they would prefer” she said.
Nationally, the number of youth working full time has fallen from 35 per cent to just 27 per cent in the past decade, with the take-up of part time work rising from 29 per cent to 33 per cent in the same period.
The HRF data shows a steady housing market, with the average price of a residential home in the Hunter sitting at $451,257 in June this year, up 3 per cent on the previous year.
