Labour force
Employment rate drops
Jobs & jobless rate: Employment rose by 10,300 in June after falling by a revised 700 jobs in May (previously reported as a 1,100 rise in jobs). Economists had expected a flat result.
The unemployment rate rose from 5.6 per cent to 5.7 per cent in June – a near four year high. The participation rate rose from 65.2 per cent to 65.3 per cent.
Full-time jobs fell by 4,400 after falling by 6,800 in April. Part-time jobs rose by 14,800 in June after rising by 6,100 in May.
In the first six months of 2013 over 104,700 jobs have been created. Part time jobs have risen by 82,700 in first six months of 2013 – marking the biggest lift in a calendar year in 11 years.
The number of hours worked rose by 0.5 per cent in June to be up 1.9 per cent in over the year to June.
Unemployment across states and territories: NSW 5.4 per cent (5.5 per cent in May); Victoria 5.4 per cent (5.4 per cent); Queensland 6.4 per cent (5.9 per cent); South Australia 6.0 per cent (5.9 per cent); Western Australia 4.6 per cent (4.9 per cent); Tasmania 8.9 per cent (7.5 per cent); Northern Territory 5.3 per cent (5.2 per cent); ACT 3.7 per cent (3.9 per cent).
What does it all mean?
Overall though the job market is in good, but probably not great, shape. Jobs continue to be created across the economy, but it is really been driven by part time work. Unemployment rate is ticking higher but still remains well below 6 per cent – a level that it has held below for almost a decade. The last time that the jobless rate remained below 6 per cent for an extended period was in the 1970s.
But while employers are not out there significantly firing workers they are not adding to the workforce. Rather businesses are in a holding pattern, awaiting an improvement in conditions and managing staff hours. The latest figures show that businesses are still more inclined to hire part-time workers and contract staff than take on full-time staff. Part time employment lifted by almost 83,000 workers in the first six months of 2013 – recording the biggest calendar year lift in 11 years. The people getting jobs probably prefer full-time work to part-time work, and the loss in income, has had an indirect hit on discretionary retail spending. Non-food spending rose by just 0.9 per cent over the past year.
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.The estimate of the unemployment rate probably has a better pulse on the economy. Jobs are being created but not at a pace to see a fall in the unemployment rate.
It is likely that unemployment will rise over the next couple of months. The trend estimates provide the best guide to labour market conditions and they show a modest lift in the jobless rate from 5.6 to 5.7 per cent.The labour market is likely to change towards the latter part of 2013, after the election and as firms get more confident about the outlook for their businesses and about the broader economy. Activity levels across the broader economy are only in the early stages of a recovery, largely driven by the improvement in housing activity.
The Reserve Bank is well placed to cut rates again if it deems it is necessary. The inflation data in late July is the next hurdle. We have pencilled in a rate cut in August. Lack of retail activity, tough trading conditions and underemployment across the economy will ensure an easing bias is maintained.
