This blog has written a lot about the upcoming economic storm approaching Western Australia as the state comes out the back of the biggest commodity price and mining investment boom in history, along with the likely crashing of dwelling investment as its population growth plummets.
Today, I want to shift attention to Darwin, which is facing a similar set of circumstances and risks similar economic headwinds as Inpex Corporation’s $34 billion Ichthys LNG Project – effectively three mega-projects rolled into one – approaches completion.
As noted in ABC News today, recruitment firm Manpower has found that jobs in the Northern Territory are drying up fast as mining capex begins to fall:
The NT recorded the first negative net employment outlook (NEO) since the group’s survey began in 2004.
Manpower’s general manager Jamie Butterworth told the ABC the drop should not come as a shock.
“The decrease was mainly driven by an 18 per cent fall in non-dwelling construction, which isn’t surprising coming out of the construction phase of the mining boom and the slowdown overall in mining,” he said.
The Territory’s NEO was minus 1 per cent for the next three months, compared to the national figure of 4 per cent.
Manpower’s net employment outlook figure is calculated by subtracting the percentage of employers expecting to fire staff from the percentage expecting to hire…
Manpower said the Territory Government should work to diversify the economy beyond mining to sectors like tourism and defence spending.
The unwind of mining jobs in the Northern Territory has been telegraphed for some time, given mining capex is well past its peak and destined to fall further as the Ichthys LNG Project is completed:
According to the Government’s resources and energy major projects list, the Ichthy’s LNG project is estimated to employ some 4,000 direct construction workers during the construction phase, but only 700 workers once completed – a reduction of 83%. Add in indirect employment, and the impact is likely to be much worse.
Already, the Territory’s economy is being hit hard, with final demand falling heavily over recent quarters, down by 15% in the 2015 calendar year:
So far, the unemployment rate has held up well, and was just 4% in January. However, both full-time and total jobs growth is softening:
Meanwhile, the Darwin housing market is correcting, with prices down 2.6% in the year to February, according to RP Data, and rental vacancy rates surging to nearly 4%:
Asking rents, too, are down heavily in Darwin, according to SQM Research:
Finally, dwelling construction is still running well above population growth in the Northern Territory:
With the lack of diversity in the Northern Territory economy, and further big declines in mining capex expected, I strongly advise readers to avoid Darwin property.
