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Thursday 18

October, 2018 7:37 AM



Aussie unemployment continues to slide

Aussie unemployment continues to slide

Employment rose by 12,000 in May after an 18,400 increase in jobs in April (previously reported as a rise of 22,600 jobs).

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14.06.2018 03:56 PM

Jobless rate falls to six-month low
Labour force

Employment rose by 12,000 in May after an 18,400 increase in jobs in April (previously reported as a rise of 22,600 jobs). Full-time jobs fell by 22,600 while part-time jobs rose by 32,600. Economists had tipped an increase in total jobs of around 19,000.

Hours worked fell by 1.4 per cent in May but were up by 1.3 per cent over the year. Trend hours worked rose by 0.2 per cent in May and are up 2.7 per cent over the year.

The unemployment rate fell from 5.6 per cent to a 6-month low of 5.4 per cent. The participation rate fell from 65.6 per cent to 65.5 per cent.

Unemployment across states in May: NSW 4.9 per cent (April 5.0 per cent); Victoria 5.1 per cent (5.2 per cent); Queensland 6.2 per cent (6.5 per cent); South Australia 5.6 per cent (5.9 per cent); Western Australia 6.4 per cent (6.5 per cent); Tasmania 6.6 per cent (6.1 per cent). In trend terms unemployment in the Northern Territory was steady at 4.0 per cent; ACT unemployment fell from 3.8 per cent to 3.7 per cent.

State/territory jobs: In seasonally adjusted terms, the largest increase in employment was in Victoria (up 22,100 persons), followed by Queensland (up 5,000 persons), and New South Wales (up 2,800 persons). The largest decrease was in Western Australia (down 1,900 persons).

What does it all mean?

There is little new to report on the job market. Jobs are being created, unemployment is falling and the proportion of Australians in work or looking for work remains near record highs. The jobless rate is at six-month lows but the last time it was lower was 5½ years ago in January 2013.

Australian businesses are doing well. Income is rising, driven by spending by consumers, foreign customers and other businesses. As a result profits are rising and businesses are responding by lifting investment and employing more workers. And these new workers are, in turn, spending, creating a virtuous circle of activity.

A key reason why the unemployment rate isn’t falling even more is because more people are entering the job market in the search for work. Workforce participation is just off record highs. But we, like the Reserve Bank, expect the unemployment rate to fall further (albeit gradually), leading to firmer growth of wages and prices.

As we travel across the country we are hearing the same things as the Reserve Bank – that employers in mining, mining services, construction and engineering are finding it hard to attract the right staff. Hourly wages are creeping higher. But businesses are still keen to cut costs where they can rather than lifting prices.

The latest jobs data is encouraging for retailers and other consumer-focussed businesses.

Interest rates will remain on hold until there is firm evidence that skill shortages are leading to broader-based increases in wages, and therefore higher selling prices.

What do the figures show?

Employment rose by 12,000 in May after an 18,400 increase in jobs in April (previously reported as a rise of 22,600 jobs). Full-time jobs fell by 22,600 while part-time jobs rose by 32,600. Economists had tipped an increase in total jobs of around 19,000.

Over the past year, jobs rose by 303,900 or 2.5 per cent. Employment growth has eased to more sustainable levels after the record job gain of 426,800 in the year to January (up 3.5 per cent). Over the past five years annual job growth has averaged 198,900 or 1.7 per cent.

Hours worked fell by 1.4 per cent in May but were up by 1.3 per cent over the year. Trend hours worked rose by 0.2 per cent in May and are up 2.7 per cent over the year.

The unemployment rate fell from 5.6 per cent to a 6-month low of 5.4 per cent. The participation rate fell from 65.6 per cent to 65.5 per cent.

Unemployment across states in May: NSW 4.9 per cent (April 5.0 per cent); Victoria 5.1 per cent (5.2 per cent); Queensland 6.2 per cent (6.5 per cent); South Australia 5.6 per cent (5.9 per cent); Western Australia 6.4 per cent (6.5 per cent); Tasmania 6.6 per cent (6.1 per cent). In trend terms unemployment in the Northern Territory was steady at 4.0 per cent; ACT unemployment fell from 3.8 per cent to 3.7 per cent.

State/territory jobs: In seasonally adjusted terms, the largest increase in employment was in Victoria (up 22,100 persons), followed by Queensland (up 5,000), NSW (up 2,800), South Australia (up 2,600), Tasmania (up 400). The largest decrease was in Western Australia (down 1,900).

The working age population rose by 24,800 in May or 1.59 per cent to 20.21 million. Over the year the working age population rose by 315,800.

The under-employment rate rose from 8.4 per cent to 8.5 per cent in the three months to May but was down from 8.7 per cent a year ago. The under-utilisation rate was steady at 13.9 per cent in May (14.3 per cent a year ago).

Why is the data important?

The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.

If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.

What are the implications?

Unemployment hasn’t been lower for over five years. The good news is not just that people are finding jobs, but those with jobs are more confident about holding on to their positions.

The SEEK job advertisement data out today confirms our anecdotal evidence that there is strong demand for workers in mining, mining services, construction and engineering.

CommSec expects official interest rates to remain on hold until February 2019.

Published by Craig James, Chief Economist, CommSec
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