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Job losses to worsen in SA: report

Monday, 21 October 2013
Author: Kevin Naughton, Indaily

South Australia is facing further job losses across its manufacturing sector, a major economic report says.

With unemployment trending upwards in recent months, jobs now loom as a key State election issue.

Deloitte Access Economics Quarterly Business Outlook sees South Australia as the State that never quite made it into the fast lane of the two-speed economy, missing out on the mining boom.

"That means the pain being felt by the State's families at the moment is very real: that can be seen in the labour market where job losses are starting to mount - employee headcount has fallen across the State over the past year - with the unemployment rate continuing to rise sharply in recent months," the Deloitte report, released today, says.

"But it can also be seen elsewhere, with hotel occupancy rates in the State falling and small business confidence weak."

Deloitte says the current economic data "tells an essentially sombre story in the short term."

"Yet although the drivers of growth are shifting, that shift may have come too late to stave off further job losses in SA's manufacturing sector."

There may be some good news, however, with traditional markets in agribusiness and emerging markets in education.

"So South Australia missed many of the benefits of the resources boom, but the State looks set to capitalize on the State's strengths across a new set of developing opportunities, particularly in agribusiness and education.

"For example, foreign students in South Australia are already a billion dollar business, and the State - with its world class universities and education institutes - has been generating a rising share of the earnings of the Australian international education sector.

"Similarly, the State's "wine lake" came of age when the $A was riding high. But the latter is already off its peaks, and probably has further left to fall. At the same time Asia's rapidly growing middle classes will be increasingly able to afford the good things in life - and that includes SA's food and wine."

On a broader note the Outlook sees positive signs in global growth and string signals in many parts of the national economy.

"Ignore US budget shutdown and debt ceiling woes: global growth continues to improve.

"China appears to be through the worst of its slowdown, US recovery is becoming ever more solid, Japan's juggle hasn't come a cropper, and Europe's core is growing again.

"But Australia's outlook remains below trend."

Deloitte's analysts see the strength in China as good news for Australia.

"There are many more reasons to be happy than most Australians have realised, with some 'big guns of growth' pointing in a positive direction."

The analysts forecast that while Australia adjusts from the mining construction boom, growth will be slow, but steady.

"The spending on mega mining construction projects which generated most of the growth in Australia's economy in recent years has already peaked, and the fall from that peak will strip the better part of a year's growth out of the next three years.

"Even so, there are so many other positives - especially higher exports, but also lower imports and a dose of better news on retail and homebuilding - that the overall pace of economic growth won't be much below trend."

Among the States and Territories, it's a case of strong States coming back to the field, rather than weaker ones catching up.

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