Detailed labour market data
- Industry employment: Employment rose by 50,100 over the three months to February – the biggest quarterly increase in year.
- Employment rose in 12 of the 19 industry sectors. The largest job gains was in Health Care and Social Assistance (up 28,100), followed by Other Services (up 24,300), and Education & Training (up 22,800).
- Low interest rates support housing: The construction sector recorded a gain of 19,700 jobs in the February quarter.
What does it all mean?
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Employment up in February.
Last week we learned that employment surged in February. And today we learn where the jobs growth occurred – or more precisely, how many jobs were gained in the past quarter.
- The good news is that job gains have accelerated with more than 50,000 people finding a job in the past three months, the biggest quarterly increase in a year. And the result followed a significant upward revision to the prior quarter. Even more encouraging was that 12 out of the 19 sectors recorded job gains, suggesting that the labour market is shrugging off its 2013 malaise.
- An improvement in business confidence and conditions since the September Federal election has resulted in significant job growth over the past six months. Health Care continues to be the stalwart sector for hiring. However it was interesting to see that the construction sector created almost 20,000 jobs in the three months to February. The strength in housing activity is translating through to additional demand for construction workers. The fundamentals for housing remains strong. Low interest rates, strong population growth and healthy total returns on property are likely to result in a further increase in demand for new housing. In fact building approvals lifted to record highs in January – suggesting further demand for construction workers in coming months.
- It is important to highlight that the detailed labour data is backward looking and more of a snapshot on how the economy looked 4-5 months ago. Clearly it takes time to take on new staff, from the start of the interviewing process to when the new starters finally commence work. Forward looking indictors like consumer and business confidence remain healthy, while retail sales and housing activity have recorded a noticeable lift in recent months. The key is for an ongoing improvement in business profitability, which should lead to a further lift in hiring.
What do the figures show?
Industry employment:
- Economy-wide employment rose by 50,100 in the three months to February 2014 – the best quarterly result in a year. The prior result was revised up from job gains of 18,400 to 38,700 in the three months to November.
- Employment fell in just 7 of the 19 industry sectors. Employment rose most in Health Care and Social Assistance (up 28,100) followed by Other Services (up 24,300), Education & Training (up 22,800), and Construction (up 19,700). Job losses in Retail Trade totalled 31,800 while 24,900 jobs were lost in Wholesale Trade and Accommodation & Food Services lost 18,900 jobs.
- Healthcare remains the biggest employer with almost 1.43 million employees (12.2 per cent of the total) followed by Retail Trade (10. per cent) and Construction (8.8 per cent).
- The Australian Bureau of Statistics (ABS) provides detailed labour market figures one week after releasing ‘top level’ statistics of employment & unemployment levels across states and territories. The detailed data is useful in identifying broader underlying trends and instructive about the health of the economy.
- In the past quarter employment in retail trade fell by 31,800, but it follows the hiring spree in the prior three months – where 44,000 jobs were created in the November quarter – marking the biggest lift in 16 years. No doubt structural changes in the sector – growth of online spending – may result in more sedate retail jobs growth going forward. Importantly the strength in share markets and property prices has been the key driver behind the improvement in wealth levels. Higher wealth and firmer confidence should support activity and overall employment.
- The latest data give the Reserve Bank no reason to change its views on monetary policy and to stay on the interest rate sidelines. Low rates will continue to foster stronger domestic growth while helping to boost exports. CommSec expects the first rate rise to take place in the December quarter.
What is the importance of the economic data?
- The Australian Bureau of Statistics (ABS) provides detailed labour market figures one week after releasing ‘top level’ statistics of employment & unemployment levels across states and territories. The detailed data is useful in identifying broader underlying trends and instructive about the health of the economy.
What are the implications for interest rates and investors?
- In the past quarter employment in retail trade fell by 31,800, but it follows the hiring spree in the prior three months – where 44,000 jobs were created in the November quarter – marking the biggest lift in 16 years. No doubt structural changes in the sector – growth of online spending – may result in more sedate retail jobs growth going forward. Importantly the strength in share markets and property prices has been the key driver behind the improvement in wealth levels. Higher wealth and firmer confidence should support activity and overall employment.
- The latest data give the Reserve Bank no reason to change its views on monetary policy and to stay on the interest rate sidelines. Low rates will continue to foster stronger domestic growth while helping to boost exports. CommSec expects the first rate rise to take place in the December quarter.
