Jobs hit new highs and outlook bright

Labour force

• Full-time jobs rose by 41,600 in December while part-time jobs rose fell by 4,100.
• Jobless rate falls: The unemployment rate fell from 6.2 per cent to 6.1 per cent in December. The participation rate rose from 64.7 per cent to 64.8 per cent.
• Hours worked fell by 0.5 per cent in December after falling by 0.3 per cent in November. Hours worked are up 0.3 per cent over the year.
• Unemployment across states: NSW 5.9 per cent (November 6.0 per cent); Victoria 6.5 per cent (6.8 per cent); Queensland 6.1 per cent (6.8 per cent); South Australia 6.5 per cent (6.6 per cent); Western Australia 6.0 per cent (5.3 per cent); Tasmania 6.7 per cent (6.9 per cent). In trend terms unemployment fell from 3.8 per cent to 3.6 per cent while ACT unemployment was stable at 4.9 per cent. 

What does it all mean?

• The monthly data on employment and unemployment are backward-looking. The outcomes reflect decisions made by businesses up to 5-6 months ago. So the fact that more than 80,000 jobs have been created in two months is encouraging, however we have doubts about the strength of recent job gains. Still, the data does line up with taxation data suggesting more people are in work and paying tax.
• More important for investors and policymakers is what lies ahead. Job vacancies are at 2-year highs and job ads have lifted for seven straight months, so the outlook is positive. Add in the fact that home building is continuing to lift with building approvals at record highs. And lower petrol prices will reduce business costs and lift spending – both positive for jobs.
• The Bureau of Statistics jobs data in seasonally adjusted terms is volatile on a monthly basis. But the ABS has always stressed that it is the trend data that bears watching, and that advice remains good advice. The good news is that employment is growing by almost 15,000 people per month with signs that the jobless rate has peaked.
• We expect the Reserve Bank to remain on the interest rate sidelines over 2015.