The Hunter is projected to create about 34,000 jobs over the next five years as the region's economy shifts, driven by energy transition and infrastructure projects, analysis has revealed.
Accounting firm KPMG's Enterprising Cities report, released on Thursday, analysed the regional economies accounting for more than a third of the country's workers, and found while there were economic headwinds the Hunter's future economy was in an optimistic frame.
The forecast follows a post-COVID jobs boom that created 43,000 roles. Employment growth stabilised towards long-term trends after the post-COVID surge, as economists projected a strengthening and diversifying Hunter economy over the coming years.
Unemployment remained at historic lows, though with a slight increase to 4.4 per cent in December, while workforce participation rates continued to rise.
Businesses at the top end of town, turning over more than $10 million, surged by 17 per cent in the past two years, the data revealed, totalling more than 840.
Mid-sized businesses with turnover between $5 million and $10 million grew by 12 per cent.
Major initiatives in energy transition, as the region that produces more than 60 per cent of the state's power shifts towards renewables, coupled with longer-term improvements to infrastructure and transport linking the Hunter to Sydney, boded well for the Hunter's economy in coming years.
The shift towards renewable energy production targeting battery storage, transmission infrastructure and substations would invigorate the economy.
Fuel price shocks linked to the conflict in Iran were expected to weigh on the Hunter, with diesel-reliant construction and mining sectors exposed to higher costs, with long-distance commuters, farms and mining sites also vulnerable.
Still, analysts said the region was punching above its weight, as large-scale investments brightened the long-term horizon, and resilience through recent shocks boosted confidence.
"The region's strong business growth, particularly at the top end of town is proof it is now giving Sydney a run for its money when it comes to the best places to do business" KPMG Newcastle Partner Steph Loadsman said.
"Skilled workers know that they don't need to commute to Sydney to work for businesses that are competing on the national and global stage."
Upticks at home were balanced against more sober trends in the national view. Gross profit margins excluding mining fell, with downward trends reflecting increasing business pressures from rising operating costs and cost-of-living pain. Average national business gross profits were about 11.5 per cent in December 2021, but fell to about 10.5 per cent in 2025, analysts found.
Those sectors with an outsized share of the Hunter economy also represented some of the thinnest profit margins, according to national outlooks, as sectors were squeezed by rising costs and cooled consumer sentiments put on ice by high interest rates.
Retail and hospitality lost ground in 2025, after post-COVID surges, tracking with local operator experience, as home budgets tightened, contributing to the sectors shedding jobs in the past two years.
Increased costs also hit construction. Despite representing the third largest employer in the region, home building trends had flattened and job numbers remained steady.
The Hunter did not share the same upward trends in quarterly building approvals, the report found, as analysts suggested higher costs had made commercially viable projects harder to deliver.
While population growth had eased, annual approvals remained about 5000, equivalent to 6.9 per 1000 people, just below the national benchmark of seven.
Price points for newly approved dwellings skewing to the top of the market strained the region's liveability, as approvals for dwellings between $600,000 and $800,000 fell from about 2000 in 2023-24 to about 800 in 2024-25. Approvals for dwellings at the higher end of the market, between $1.4 million and $1.5 million, were increasingly concentrated.
Analysts warned the trend indicated housing supply was skewing towards higher-earning households, while lower-income earners and renters had seen regional liveability erode.
The construction industry represented the largest number of businesses in the region, but non-employing sole traders and small businesses employing fewer than five people continued to dominate the business landscape. Still, hundreds of trade and technical job ads, and demand for operators and drivers, indicated strength in industry, with analysts finding optimism for the region's manufacturing and infrastructure in the long-range outlook. Technicians and trades had more than 800 advertisements, along with operators and drivers with 300 job ads.
About 1200 job ads seeking professionals eclipsed demand in other areas, indicating the Hunter economy was diversifying, analysts said, adding new knowledge-based roles to support the region's traditional powerhouses.
"This trend runs counter to patterns seen in many other Enterprise Cities and highlights the region's increasing diversity as it adds more white-collar jobs to support the region's strong mining and manufacturing sectors," KPMG senior economist Terry Rawnsley said.
Analysts said broader nation-building investments promised to strengthen the region's economy, singling out planning studies for high-speed rail connecting Newcastle to Sydney, guided weapons manufacturing at Williamtown, and the Port of Newcastle's container terminal decision, coupled with the redevelopment of the Newcastle Art Gallery "highlighting the region's changing character and attractiveness to new residents".
