Cairns Jobs Boom - Is Queensland's Tropical Capital Getting Its Groove Back?

Tuesday 11 December, 2018 | By: Dr Marcus Smith Categories: Employment;

As the gateway to the Great Barrier Reef, the Daintree Rainforest and Cape Tribulation in tropical north Queensland, the Cairns region is renowned for its vibrant, yet laid-back tropical lifestyle.

Cairns Chamber of Commerce president Nick Loukas is extremely upbeat about the region’s economy coming into 2019, as the turf is turned on major new developments such as $370 million of investment into three hotel developments by Crystalbrook Collection and 15 other projects on the horizon. You can read it here.

With all the portents seemingly pointing in the right direction for the Cairns region, let’s have a look at some of the key employment indicators for the region.

Cairns business statistics

Australian Bureau of Statistics data shows the Cairns region to hold around 13,650 businesses, of which construction makes up the largest share (~18.5%), followed by Rental, Hiring and Real Estate (~12%). You can read it here.


While not an ANZSIC industry division, tourism and hospitality are service industries key to the Cairns economy.

According to economic statistics compiled by the National Institute of Economic and Industry Research, direct and indirect employment related to tourism and hospitality represents around 14.6% of total industry within the Cairns Regional Council city limits. You can read it here.

Employment Trends

Regional ABS employment data compiled by Mission Beach-based Economist Pete Faulkner and Conus/CBC Staff Selection indicates that consecutive months of positive employment news for Cairns over the back end of 2018 has reversed difficult conditions observed at the start of the year. 

As the largest employer in tropical north Queensland, October’s estimate of around 120,700 employed persons on a trend basis comes as the Cairns regional economy recorded 6 consecutive months of growth in persons employed full time; however, this was offset to an extent by a third straight month of declines in part time employment.

Over the past 12 months to October, the Cairns economy has added some 3,700 jobs in trend terms (~3.2% increase) - yet this annual contribution is entirely attributable to part time jobs on a net basis. 


By inspection, the October trend figure is above the 120,000 level - an apparent level of technical resistance - where monthly total employed persons has grown to be around before retreating on several occasions over the last decade including periods during mid-2017, late 2012 into early 2013, most of 2010 and late 2008.

Economist Pete Faulkner from Conus Consultancy Services notes that it is curious that “even at a time of relative strength, and after a period of good population growth, trend employment is still not yet at new highs”.

“Scenario modelling suggests that we would need to see the original data for November come in at about 122,500 for the Trend to break through that resistance level.

“October’s original was 123,600 and, looking at the original data, there is some suggestion that November is generally a month with high original data tending to come in above prevailing trend - perhaps as employers gear up for Christmas.

“So, this certainly presents as a good time to break through that level of resistance”, Mr Faulkner said.

Looking closer at the jobs growth figures, charting the changes in the trend data for total jobs numbers illustrates the ebbs and flows across the labour force cycle in both the first difference and percentage changes.


Analysing the numbers another way, the percentiles for each job growth number in relation to the whole data set show that employment growth over recent months has been strong relative to all observations dating back to 1998.

In fact, July and August this year are shown to be the highest months on record at around 2050 and 2100 additional persons on the books, respectively - but growth does indeed seem to be slowing.


Relative Employment Trends

Looking at the proportion of persons considered to be in the work force but looking for a job, the Cairns unemployment rate of 6.04% in October is currently below Queensland’s headline rate of 6.23% - and far lower than the average trend unemployment rate of 6.89% since October 1998.

Moreover, the results of an analysis of variance shows that there is a highly, statistically significant difference between the average unemployment rates for Queensland and Cairns (State average is 5.97%) – with the differential between the averages being 0.92%.


Comparing the unemployment rate in Cairns to other regions in Queensland, it is currently 0.90% lower than Townsville, 0.70% lower than the Fitzroy, 0.37% lower than Greater Brisbane, but 2.02% greater than Mackay - the State’s strongest performing region on the jobs front.


The following analyses show that while the Cairns unemployment rate is currently below the Townsville rate, statistically speaking, there is no difference between the average unemployment rates over time.

On the other hand, there are highly significant statistical differences in the average unemployment rates between Cairns and Fitzroy (+0.57%), Mackay (+1.93%), and Greater Brisbane (+1.21%). 



Employment Prospects for a Lower Australian Dollar

According to conventional economic wisdom, a falling Australian dollar - as we have seen in recent years - should ideally improve the competitiveness of the Cairns tourism industry and spur new employment opportunities as it becomes cheaper for foreigners to holiday as well as study in Australia, while at the same time more expensive for domestic residents to travel overseas.

A cursory glance over the time series of total employed persons in Cairns and the Australian dollar exchange rate (AUD/USD) suggests there is no discerning association between the two.


To investigate more thoroughly the strength in association between the change in employed persons in the Cairns region and the exchange rate, I first split the regressions over two periods – one when the exchange rate was rising, and another when it was falling:

(i)                 over the sample period from October 1998 leading up to the peak of 1AUD = $US1.0945 in July 2011;

(ii)                the remaining sample period after the peak in July 2011 where it has fallen to 1AUD = $US0.7085.




The results of the regressions indicate that there was no relationship between employment growth and the exchange rate over the sample period October 1998 to July 2011; and there is a weak, negative association from July 2011 to October 2018 (which is only significant at the 10% level).

Moreover, the coefficient of determination (adjusted R2 value) indicates that the variation in the exchange rate explains less than 5% of the variation in employment growth in both cases.

I subsequently looked at the unemployment rate, again searching for evidence of a significant association between labour force statistics and the exchange rate.

Similarly, what I found was although there appears to be a significant positive relationship between unemployment rates and the exchange rate – indicative of the unemployment rate rising (falling) with a rise (fall) in the Aussie dollar – the association is also weak and holds very limited explanatory power.


Given that Australia’s exchange rate has fallen substantially since 2011, one important take home note for policy-makers and business leaders across the Cairns region is that one should be very careful when taking a conventional view of there being a deterministic relationship between the exchange rate and local labour force outcomes; at least in part, this is because Australia’s workforce has changed quite significantly over recent decades.

For instance, in a previous article I analysed how the industry composition of the Australian economy has changed over the last couple of decades, finding that between February 2000 and October 2018 employment within traditional, trade-dependent industries such as Agriculture, Forestry and Fishing and Manufacturing have declined significantly – Agriculture shed around 116,000 jobs while Manufacturing lost about 97,000. You can read it here.

The article further showed that these two industry divisions were the only ANZSIC industry divisions to hold an inverse association between total employed persons in Australia and the Australian/U.S. exchange rate over that period.

Again, thanks to Pete Faulkner and his team for doing a fantastic job compiling the regional labour force statistics.