Employment rose by 14,500 in September after a revised loss of 9,100 jobs in August (previously -8,800). Economists had expected 5,000 jobs to be added.
- In September, full-time jobs rose by 32,100 after rising by 800 in August. Part-time jobs fell by 17,700 after falling by 9,900 in August. Full-time jobs have only fallen once in the past five months.
- The unemployment rate lifted from 5.1 per cent to 30-month high of 5.4 per cent in September as the number of people entering the job market outweighed the number finding work. The participation rate rose from a near 6-year low of 65.0 per cent to 65.2 per cent.
- The number of hours worked rose by 0.5 per cent in September after falling 0.3 cent in August and now stands 0.3 per cent higher in annual terms.
- The proportion of youths in the workforce is the lowest in 18 years. On average over the past year, 55.2 per cent of 15-19 year olds (including students) were in jobs or looking for work. There has been a sharp decline in the proportion of youths in the workforce over the past four years.
- Unemployment across states and territories: NSW 5.2 per cent (4.9 per cent in August); Victoria 5.6 per cent (5.6 per cent); Queensland 6.3 per cent (6.0 per cent); South Australia 5.6 per cent (5.7 per cent); Western Australia 4.0 per cent (4.0 per cent); Tasmania 7.3 per cent (6.8 per cent); Northern Territory 3.9 per cent (3.9 per cent); ACT 3.8 per cent (3.7 per cent).
What does it all mean?
- The doom and gloom headlines suggest jobs are being slashed across the nation. The official jobs data suggests otherwise. In fact, the data suggests that more than 32,000 people found new full-time jobs in the latest month – hardly indicative of a parlous job market.
- Of course, the figures shouldn’t be taken literally. The data is volatile from month to month and there is a fair margin for error. So the trend remains your friend. And the trend figures suggest that the job market is largely flat with the unemployment rate generally holding in a 5.1-5.3 per cent range. Certainly there are a number of employers that are cutting costs and thus shedding jobs. Other employers are sitting tight. And still others, especially in hospitality, health and resources, are crying out for staff.
- It would be wrong to conclude from the latest data that hiring is going gangbusters. And it would be wrong to conclude that unemployment is soaring. In a big picture sense the job market is in a holding pattern.
- The real surprise is that the 5.4 per cent jobless rate is actually a 2½-year high. It just highlights the extent that the job market has been in a holding pattern with unemployment in a tight 5.1-5.3 per cent range.
- The latest job figures provide more complications for Reserve Bank. A surge in both job growth and the unemployment rate in the same month make it more difficult to know what the true situation is. But looking across a raft of indicators, the best appraisal is that the economy is in a holding pattern. As such, rate cuts still remain on the agenda, but the size of job growth in the latest month does make it harder for the Reserve Bank to justify a rate cut in November.
- One of the interesting trends in the job market is how few young students have jobs. Of those between 15-19 years (mainly students), only 54.2 per cent had jobs or were looking for work in September. Using rolling annual averages to smooth out seasonality, the average was 55.2 per cent in the year to September – the lowest level in 18 years. Retail and hospitality businesses are crying out for staff and students could be filling those positions. The question is whether students aren’t keen on working and studying at the same time or whether labour laws are hindering employers from taking on young workers.
What do the figures show?
- Employment rose by 14,500 in September after a revised fall of 9,100 jobs in August (previously -8,800). The job-market has exhibited a zig-zag pattern over the past five months. Economists had expected 5,000 jobs to be added. Part-time jobs fell by 17,700 after falling by 9,900 in August. Full-time jobs rose by 32,100 after rising by 800 positions in August.
- The annual employment growth rate remained at 0.5 per cent in September. The working age population rose by 22,300 in September after lifting by 22,500 in August. The working age population grew by 1.33 per cent over the past year – the fastest rate of growth in 14 months.
- The unemployment rate rose from 5.1 per cent to a 30-month high of 5.4 per cent in September. The participation rate lifted from a near 6-year low of 65.0 per cent (lowest since November 2006) to 65.2 per cent.
The number of hours worked rose by 0.5 per cent in September after falling 0.3 cent in August and now stands 0.3 per cent higher in annual terms. - In trend terms employment fell by 1,000 in September, the unemployment rate equalled the 26-month high of 5.3 per cent set in August and the participation rate held at 65.2 per cent for the fourth month.
Unemployment across states and territories: NSW 5.2 per cent (4.9 per cent in August); Victoria 5.6 per cent (5.6 per cent); Queensland 6.3 per cent (6.0 per cent); South Australia 5.6 per cent (5.7 per cent); Western Australia 4.0 per cent (4.0 per cent); Tasmania 7.3 per cent (6.8 per cent); Northern Territory 3.9 per cent (3.9 per cent); ACT 3.8 per cent (3.7 per cent). - NSW recorded the biggest job gains in September (+13,300), followed by Western Australia (+11,100), Victoria (+9,100), South Australia (+3,600), Northern Territory (+500 in trend terms), ACT (+100 in trend terms). Jobs fell most in Queensland (-20,800), and Tasmania (+1,100).
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?
- Last month we wrote the following and we see no reason to change it: “The job market is flat, and the lead indicators such as job advertisements suggest that there is little improvement on the horizon. It is more likely that the job market will soften a little further in coming months, and that could prompt the Reserve Bank to cut rates. The working age population is growing, meaning that it will take more jobs to be created to prevent the jobless rate from rising.”
- “Investors should be careful about following the headlines, without digging further to determine if they have the true picture. While some businesses are paring back staff, others still complain that it is hard to attract and retain good people.”
- In terms of new observations, we are concerned that there aren’t more students supporting the job market. Back in my day (showing my age), plenty of kids between 15 and 19 years of age had part time jobs at supermarkets, food stores or other retailers. Are young people still interested in taking on part-time positions, or is the problem with labour or tax laws? If families are indeed doing it tough you would assume there would be more students with part-time jobs to get some added pocket money. The long-term challenge of an ageing population in Australia is to increase the workforce participation rate. Authorities should be investigating any barriers that prevent people from joining the job market.