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Thursday 17

January, 2019 4:04 PM



NSW jobless rate at a record low

NSW jobless rate at a record low

Employment rose by 37,100 in November after a revised 28,600 increase in jobs in October (previously reported as a 32,800 increase in jobs).

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20.12.2018 03:47 PM

NSW jobless rate at record (40-year) low
Record number of babies born
Labour force

Employment rose by 37,100 in November after a revised 28,600 increase in jobs in October (previously reported as a 32,800 increase in jobs). Full-time jobs fell by 6,400, but part-time jobs rose by 43,400. Economists had tipped an increase in total jobs of around 20,000.

The unemployment rate rose from 5.0 per cent to 5.1 per cent in seasonally adjusted terms. In trend terms the jobless rate fell from 5.2 per cent to a 6½-year low of 5.1 per cent.

Participation rate: The participation rate rose from 65.5 per cent to 65.7 per cent. In trend terms the 65.7 per cent participation rate was a record high.

Unemployment across states in November: NSW 4.4 per cent (October 4.5 per cent); Victoria 4.6 per cent (4.5 per cent); Queensland 6.4 per cent (6.3 per cent); South Australia 5.3 per cent (5.4 per cent); Western Australia 6.5 per cent (5.7 per cent); Tasmania 5.8 per cent (5.2 per cent). In trend terms, Northern Territory 5.0 per cent (4.8 per cent); ACT 3.4 per cent (3.5 per cent).

Population: Australia’s population expanded by 390,509 people over the year to June 2018 to 24,992,369 people. Overall, Australia’s annual population growth rate rose from 1.56 to 1.59 per cent. A record 314,800 babies were born over the past year. 

What does it all mean?

The story hasn’t changed – the job market remains in strong shape. More people are looking for work; more people are finding work. In the latest month the seasonally adjusted results have been volatile, especially across the state results. So the trend is your friend. The trend jobless rate is at 6½-year lows and the participation rate is at record highs. More people than ever are looking for jobs and finding work.

Not only does the increase in employment represent good news for retailers heading into Christmas. It is also the fact that job security remains strong, giving more established workers reasons to spend at Christmas-time.

In NSW the trend unemployment stands at 4.4 per cent. Monthly records go back to 1978. There hasn’t been a lower jobless rate in that time. With more in work, the outlook for the NSW economy is bright.

Leading indicators such as job advertisements, skilled job vacancies and the NAB business survey point to further job gains and further tightening of the job market. There is also
more anecdotal evidence that businesses are finding positions harder to fill. Wage growth is lifting and has potential to rise further in coming months.

The Reserve Bank has good reason to be optimistic about the economy’s prospects in 2019. We expect the Reserve Bank to remain on the interest rate sidelines in coming months but a pencilling in a rate hike in November.

The previous annual record for births was five years ago. Well that record has now been exceeded with almost 315,000 babies born in 2017/18. Look forward 3-4 years and demand for childcare places will lift and a few years later, demand for primary school places and, in turn, high school. Opportunities exist for a raft of businesses.

What do the figures show?

Employment rose by 37,100 in November after a revised 28,600 increase in jobs in October (previously reported as a 32,800 increase in jobs). Full-time jobs fell by 6,400, but part-time jobs rose by 43,400. Economists had tipped an increase in total jobs of around 20,000.

Annual job growth stands at 2.3 per cent (decade average 1.6 per cent).

Hours worked fell 0.2 per cent in November but lifted by 1.1 per cent over the year.

The unemployment rate rose from 5.0 per cent to 5.1 per cent in seasonally adjusted terms. In trend terms the jobless rate fell from 5.2 per cent to a 6½-year low of 5.1 per cent.

Participation rate: The participation rate rose from 65.5 per cent to 65.7 per cent. In trend terms the 65.7 per cent participation rate was a record high.

Unemployment across states in November: NSW 4.4 per cent (October 4.5 per cent); Victoria 4.6 per cent (4.5 per cent); Queensland 6.4 per cent (6.3 per cent); South Australia 5.3 per cent (5.4 per cent); Western Australia 6.5 per cent (5.7 per cent); Tasmania 5.8 per cent (5.2 per cent). In trend terms, Northern Territory 5.0 per cent (4.8 per cent); ACT 3.4 per cent (3.5 per cent).

State/territory jobs: In seasonally adjusted terms, the largest increase in employment was in Victoria (up 30,900 persons), followed by Queensland (up 21,800 persons). The largest decrease was in New South Wales (down 12,600 persons).

The working age population rose by 24,700 in November to 20.36 million. Over the year the working age population rose by 335,800 (13-month high) or 1.68 per cent, but this is still down from the record 2.36 per cent annual growth in December 2008.

The monthly trend underemployment rate increased less than 0.1 point to 8.4 per cent. The monthly trend underutilisation rate remained steady at 13.5 per cent.

The monthly seasonally adjusted underemployment rate increased 0.2 points to 8.5 per cent. The monthly seasonally adjusted underutilisation rate increased 0.2 points to 13.6 per cent.

Population Statistics

Australia’s population expanded by 390,509 people over the year to June 2018 to 24,992,369 people. Overall, Australia’s annual population growth rate rose from 1.56 to 1.59 per cent. Natural increase contributed 39.4 per cent to the annual lift in population with 60.6 per cent from migration.

Over the past year population growth was strongest in Victoria (2.19 per cent), followed by the ACT (2.15 per cent), Queensland (1.72 per cent), NSW (1.52 per cent), Tasmania (1.09 per cent), Western Australia (0.84 per cent), South Australia (0.72 per cent) and the Northern Territory (-0.10 per cent).

Tasmania’s annual population growth rate at 1.09 per cent is the highest since June 2009.

Australia’s population grew by 92.160 people over the June quarter, after growing by 125,136 people in the March quarter.

A total of 236,700 people migrated to Australia over year to June, down from 237,800 people in the year to March and the slowest rate in almost two years. Migration growth is down from the peak of 315,700 migrants in the year to December 2008.

There were a record 314,800 babies born in the year to June. And there were 161,000 deaths in the past year, down 2,200 on the year to March 2018.

Natural increase for the year June was 153,800, the most in almost two years and up 4.2 per cent over the year to June 2017.

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.

Demographic Statistics are issued by the Bureau of Statistics each quarter. The figures include estimates of births, deaths, in-bound and out-bound migration movements and estimates of population change by State.

What are the implications?

A strong job market has implications for a raft of businesses. The issue at present is that more and more firms are finding it hard to fill vacancies. And the reports cover a range of sectors such as hospitality, mining and construction.

More people are coming from abroad to fill job vacancies and more people will likely be required. Migration will continue to boost population, but so will births. More babies were born over the last year than any 12-month period in the past, boosting demand for goods and services across a range of industry sectors.

The job market and births are linked. Couples tend to start families when they are confident about their jobs and their finances. With job markets in strong shape, housing affordability improving, interest rates at record lows and wealth at record highs, Aussies are feeling more confident to start or expand families.

CommSec expects official interest rates to remain on hold until later in 2019. But given the speed that the job market is tightening, the situation needs to be watched closely.

The Reserve Bank will especially be watching the trends in NSW and Victoria where jobless rates are at or near record lows. The strong job markets in both states will prevent on-going falls in home prices.

Published by Craig James, Chief Economist, CommSec
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