If anyone was wondering whether the economic growth figures properly reflected what was going on in Australia, they had the answer in the latest jobs data.
The job market is becalmed, consistent with the sluggish performance of the broader economy. Western Australia is still shooting the lights out with a jobless rate of 4.0 per cent, but other states are struggling for momentum. The job market is very much ho-hum, just like the broader economy.
The job market is clearly flat as a tack – employers aren’t keen to take on new staff and there isn’t enough demand for existing employees to work longer hours. Probably the best representation of the job market is the under-utilisation rate as this encapsulates not just unemployed workers but those wanting to work longer hours. The under-utilisation rate is just below the highest levels seen in two years. The job market is clearly going nowhere fast.
For those fretting about the jobs lost in February consider this: the Bureau of Statistics is 95 per cent confident that the true result lies somewhere between job losses of 70,000 and job gains of 39,200. Fill you with more confidence about what is going on?
The Reserve Bank is well placed to cut rates again. We are pencilling in a move in May, but it could clearly come earlier. The economy is struggling for momentum and needs a kick along.
What do the figures show?
- Employment fell by 15,400 in February after rising by 46,200 in January. Economists had expected a 10,000-15,000 lift in jobs. Part-time jobs fell by 15,400 after rising by 30,900 in January. Full-time jobs were flat after rising by 15,300 in January.
- The annual employment growth rate eased from 0.3 per cent to 0.2 per cent in February – just shy of the weakest growth rate in almost 19 years.
- The unemployment rate rose from 5.1 per cent to 5.2 per cent in February. The participation rate fell from 65.3 per cent to 65.2 per cent.
The number of hours worked rose by 1.4 per cent in February after falling by 1.5 per cent in January. Hours worked is up just 0.4 per cent on a year ago. - Unemployment across states and territories: NSW 5.2 per cent (5.2 per cent in January); Victoria 5.4 per cent (5.2 per cent); Queensland 5.7 per cent (5.4 per cent); South Australia 5.2 per cent (5.1 per cent); Western Australia 4.0 per cent (4.1 per cent); Tasmania 7.0 per cent (7.1 per cent); Northern Territory 4.3 per cent (4.2 per cent); ACT 3.6 per cent (3.6 per cent).
- Western Australia led the job gains in February (up 3,400), followed by Tasmania (+3,200), NSW (+2,500). Jobs fell most in Queensland (-17,900) followed by Victoria (-12,600) and South Australia (-3,700). In trend terms employment rose in Northern Territory (+100) and ACT (+400).
- The working age population rose by 18,500 in February after lifting by 18,500 in January. The working age population grew by 1.23 per cent over the past year – equal to the smallest gain in almost 12 years.
What is the importance of the economic data?
- 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 for interest rates and investors?
The lack of job creation is clearly a worry for the housing and retail industries and other consumer-focussed sectors. Jobs aren’t being created, employees aren’t getting much in the way of overtime and lack of job security would be an issue for many industries.
Overall the jobless rate is better than most parts of the world. While that’s fine, it doesn’t provide much confidence to those in jobs or are looking for work. Cautiousness will continue, affecting spending, borrowing and investing.