Largest job gains in four years

Labour force; New motor vehicle sales

• Jobs rise: Employment rose by 37,700 in March after rising by a revised 41,900 in February (previously estimated at a 15,600 gain in jobs). Full-time jobs rose by 31,500 in March while part-time jobs rose by 6,200.
• A total of over 155,000 job seekers found work over the past five months – the best result in four years for an equivalent period. The Aussie dollar lifted by over one US cent following the result to US77.8c.
• Jobless rate eases: The unemployment rate fell from 6.2 per cent to 6.1 per cent in March. The participation rate lifted from 64.7 per cent to 64.8 per cent.
• Hours worked rose by 0.3 per cent in March to record highs. Hours worked are up 1.7 per cent over the year.
• Unemployment across states: NSW 6.0 per cent (February 6.2 per cent); Victoria 6.2 per cent (6.0 per cent); Queensland 6.6 per cent (6.6 per cent); South Australia 6.8 per cent (6.4 per cent); Western Australia 5.7 per cent (5.5 per cent); Tasmania 6.5 per cent (6.6 per cent). In trend terms unemployment in the Northern Territory was 4.3 per cent (4.2 per cent) while ACT unemployment was steady at 4.4 per cent.
• New vehicle sales rose by 0.5 per cent in March to be up 4.4 per cent on a year ago. In original terms, new vehicle sales in March were a record for a March month.

What does it all mean?

• Overall, this is an encouraging result! Employment growth surpassed even our rather optimistic expectations. In essence the biggest surprise was the significant upward revision to the prior months result. A total of over 155,000 job seekers have now found work over the past five months – the best result in four years for an equivalent period. There may be some level of statistical discrepancy. But it does resonate with the lift in the employment landscape conditions over the past six months. And more importantly rather than focusing on one month’s data the broader trend shows a similar picture.
• Last year employers were working existing staff longer and there had been a lift in productivity, while it is now clear that employers are adding to the workforce – whether it is part time or full-time roles. A healthier economy, improved job prospects, and more importantly a noted lift in job advertisement have resulted in more people searching for work, and finding employment -– a result that should increase household incomes. An added bonus is that hours worked continues to lift, now up 1.7 per cent on a year ago.
• One key positive out of the super-strong result is that it should ease concerns about the labour market. All the noise about the 12–year high unemployment rate earlier in the year dampened consumer confidence. However this time round despite the lift in the participation rate – which suggests more people are looking for work – the unemployment rate eased back to 6.1 per cent. The latest result should help to ease some of those concerns. An improvement in confidence would certainly bode well for retail activity and broader economic growth.
• Labour market conditions have certainly improved in recent months. Business conditions are ok, profitability has improved and more importantly the housing sector is providing significant support to an array of industries. No doubt the business sector is feeling more comfortable hiring as can be seen by the ongoing lift in job advertisements.
• The Reserve Bank would certainly be feeling a bit more comfortable and justifies the decision to keep interest rates on hold earlier this month. The one concern is the recent Aussie dollar strength. And while the Reserve Bank will maintain an easing bias it seems to have no need to be moving rates in any direction at present. The chance of a rate cut in May has drop from 73 per cent to 56 per cent falling the employment release.

What do the figures show?

Labour force:

• Employment rose by 37,700 in March after rising by a revised 41,900 in February (previously estimated at a 15,600 gain in jobs). Full-time jobs rose by 31,500 in March while part-time jobs rose by 6,200. In trend terms jobs rose by 20,700 in March and by 185,000 in the past year.
• The unemployment rate fell from 6.2 per cent to 6.1 per cent in March. The participation rate lifted from 64.7 per cent to 64.8 per cent. In trend terms the jobless rate is 6.2 per cent and participation rate 64.8 per cent.
• Hours worked rose by 0.3 per cent in March to record highs. Hours worked are up 1.7 per cent over the year.
• Unemployment across states: NSW 6.0 per cent (February 6.2 per cent); Victoria 6.2 per cent (6.0 per cent); Queensland 6.6 per cent (6.6 per cent); South Australia 6.8 per cent (6.4 per cent); Western Australia 5.7 per cent (5.5 per cent); Tasmania 6.5 per cent (6.6 per cent). In trend terms unemployment in the Northern Territory was 4.3 per cent (4.2 per cent) while ACT unemployment was steady at 4.4 per cent.
• The annual employment growth rate held at 1.6 per cent in March.
• Jobs across states and territories in February: NSW +26,000; Victoria +10,000; Queensland -7,900; South Australia +7,900; Western Australia +7,300; Tasmania -200. Trend terms: Northern Territory +1200; ACT unchanged.

New motor vehicle sales:

• According to the Australian Bureau of Statistics (ABS) new motor vehicle sales rose by 0.5 per cent in March to a 21-month high. New motor vehicle sales are up 4.4 per cent over the year. Passenger car sales rose by 4.5 per cent, and “other” vehicles (includes utilities, panel vans, cab chassis, goods carrying vans, rigid trucks, prime movers, non-freight carrying trucks, and buses) rose by 1.8 per cent. But sales of sports utility vehicles fell by 5.4 per cent in the month.
• Across states & territories in March car sales were: NSW (up 0.1 per cent); Victoria (up 1.3 per cent); Queensland (up 3.3 per cent); South Australia (down 5.9 per cent); Western Australia (down 0.3 per cent); Tasmania (down 3.6 per cent); Northern Territory (down 8.2 per cent); ACT (up 1.8 per cent).
• In original terms, new vehicle sales in March were a record for any March month
• 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.
• The Australian Bureau of Statistics (ABS) provides monthly estimates of new vehicle sales in seasonally adjusted and trend terms after receiving the actual sales data from the car industry. The figures highlight the strength of consumer spending as well as conditions facing auto & components companies.
• There is no question that the economy went through a lull period last year but it has since lifted. And it is pretty clear that the transition in activity from mining to housing construction has been a case of so far so good, and more importantly housing construction will support a further lift in employment.
• The sharp lift in hours worked in the past two months shows that businesses have got plenty of work to do Leading indicators like job ads point to a better job market over the rest 2015. But a further improvement in the job market will require more confident employers.
• Each Reserve Bank meeting is a “live” meeting – in other words, a rate cut will be discussed in May. But there is no rush. The Reserve Bank can opt to wait a couple of months if it deems it necessary. The quarterly inflation data released next week will provide more direction.

Why is the data important?

• 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.
• The Australian Bureau of Statistics (ABS) provides monthly estimates of new vehicle sales in seasonally adjusted and trend terms after receiving the actual sales data from the car industry. The figures highlight the strength of consumer spending as well as conditions facing auto & components companies.

What are the implications?

• There is no question that the economy went through a lull period last year but it has since lifted. And it is pretty clear that the transition in activity from mining to housing construction has been a case of so far so good, and more importantly housing construction will support a further lift in employment.
• The sharp lift in hours worked in the past two months shows that businesses have got plenty of work to do Leading indicators like job ads point to a better job market over the rest 2015. But a further improvement in the job market will require more confident employers.
• Each Reserve Bank meeting is a “live” meeting – in other words, a rate cut will be discussed in May. But there is no rush. The Reserve Bank can opt to wait a couple of months if it deems it necessary. The quarterly inflation data released next week will provide more direction.