Employment fell by 36,200 in March after lifting by 74,000 jobs in February (previously reported as up 71,500). Economists had expected a fall of 10,000 in jobs in March.
- In March, full-time jobs fell by 7,400 after rising by 19,300 in February. Part-time jobs fell by 28,700 after rising by 54,700 in February.
- The unemployment rate rose from 5.4 per cent to 5.6 per cent in March – a 3½-year high. The participation rate eased from 65.3 per cent to 65.1 per cent.
- The number of hours worked fell by 0.3 per cent in March after rising by 0.7 per cent in February. Hours worked stand 0.1 per cent lower than a year ago.
- NSW 5.5 per cent (5.3 per cent in February); Victoria 5.6 per cent (5.4 per cent); Queensland 5.9 per cent (5.9 per cent); South Australia 5.8 per cent (5.8 per cent); Western Australia 4.7 per cent (4.6 per cent); Tasmania 7.3 per cent (6.6 per cent); Northern Territory 4.2 per cent (4.1 per cent); ACT 4.5 per cent (4.5 per cent).
What does it all mean?
- If anyone had been wondering what was the true state of the labour market, they would certainly still be confused after the latest jobs result. A stellar 74,000 jobs were created in February (which incidentally marked the best job creation in 13 years) followed by over 36,000 jobs lost in March and the unemployment rate has reached a 3½-year high. Such volatile swings in employment across two months certainly make it difficult to pick a trend. Clearly the answer lies somewhere in the middle.
- The more smoothed trend measures on employment, suggest that modest consistent employment gains are the defining feature of the current employment landscape. In fact in trend terms employment has consistently grown by between 9,000-17,000 jobs over the past six month. The job market is healthy but becalmed, and consistent with the performance of the broader economy.
- Activity levels across the broader economy are only in the early stages of a recovery. Housing activity is crawling off a low base and retailers are enjoying modest improvement after a very tough trading period over 2012.
- In addition the business survey earlier this week clearly highlighted the tough trading environment for businesses. Business conditions are holding at some of the weakest levels in four-years, the forward order book is light and profitability is being squeezed – hardly an environment to entertain serious and significant job creation.
- But while employers are not out there significantly adding to the workforce they are not out there firing existing staff. Rather businesses are in a holding pattern, awaiting an improvement in conditions and managing staff hours. Hours worked fell in the latest month and are down 0.1 per cent over the year.
- The Reserve Bank is well placed to cut rates again if they deem it is necessary. However it will require a significant downturn in the domestic economy and even employment – an outcome that looks unlikely. Rather policymakers are likely to remain on the interest rate sidelines while continuing to talk down interest rates.
What do the figures show?
- Employment fell by 36,200 in March after lifting by 74,000 jobs in February (previously reported as up 71,500). Economists had expected a fall of 10,000 in jobs in March.
- Full-time jobs rose by 17,800 in February after falling by 9,500 in January. Part-time jobs rose by 53,700 after rising by 22,600 in January.
- The annual employment growth rate fell from 1.7 per cent to 0.9 per cent in March. The working age population rose by 37,500 in March after lifting by 37,600 in February. The working age population grew by 1.78 per cent over the past year (the fastest rate in 34 months).
- The unemployment rate rose from 5.4 per cent to 5.6 per cent in March – a 3½-year high. The participation rate eased from 65.3 per cent to 65.1 per cent. The number of hours worked fell by 0.3 per cent in March after rising by 0.7 per cent in February. Hours worked stand 0.1 per cent lower than a year ago.
- Unemployment across states and territories: NSW 5.5 per cent (5.3 per cent in February); Victoria 5.6 per cent (5.4 per cent); Queensland 5.9 per cent (5.9 per cent); South Australia 5.8 per cent (5.8 per cent); Western Australia 4.7 per cent (4.6 per cent); Tasmania 7.3 per cent (6.6 per cent); Northern Territory 4.2 per cent (4.1 per cent); ACT 4.5 per cent (4.5 per cent).
- NSW recorded the biggest job gains in March (up 3,400), followed by South Australia (up 2,900). Jobs fell the most in Victoria (down by 9,300), followed by Queensland (down 7,400), Tasmania (down 3,800), Western Australia (down 3,000), and the Northern Territory (down 400 in trend terms). In the ACT employment was steady in trend terms.
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?
- Overall the jobless rate is better than most parts of the world. While that’s fine, it doesn’t provide much confidence to those still looking for work, particularly given the rise in the unemployment rate.
- The latest weakness in the employment growth is likely to turnaround in coming months. Housing, retail industries and other consumer-focussed sectors are starting to see an improvement in activity levels. And the Reserve Bank looks likely to comfortably remain on the interest rate sidelines over the next couple of months.