Labour Force – April 2015
- Employment fell by by a small 2.9k in April following an upwardly revised 48.1k lift in March (previously reported as +37.7k).
- The fall in employment was driven by a 21.9k fall in full‑time jobs largely offset by a 19.0k increase in part‑time employment.
- The unemployment rate edged up a tad to 6.2% and the participation rate was unchanged at 64.8%.
- Leading indicators of employment are pointing to continuing modest jobs growth over the period ahead.
Context matters!
Yesterday’s small headline fall in employment of 2.9k missed market expectations which were centred on a small rise of 4.0k (CBA {f} +10k). But the result needs to be taken in the context of the previous month’s employment figures, particularly given the upward revision to the March figures. According to the ABS, employment lifted by 48.1k in March (previously reported as +37.7k) and by 38.0k in February.
So monthly jobs growth over the past three months has averaged 27.8k, which is a little above the required number to keep the unemployment rate flat. Indeed, the trend unemployment rate, which smooths out the monthly volatility, has moved a little lower since October 2014 (down 0.08ppts). It suggests some stabilisation in the labour market which is commensurate with what the forward looking indicators have been indicating for the past six months.
Employment growth in Australia in now estimated to be running at 1.5%pa which looks about right when married up against other indicators like the PAYG tax revenue data (see chart over the page).
The highly volatile monthly hours worked in April lifted by a solid 1.1% in spite of the ABS reporting there was a fall in full‑time jobs over the month. There has been a solid uptrend in average hours worked recently (see chart on right) which is generally considered a positive sign for the future direction of the labour market. It does, however, suggest that productivity in the economy is likely to have softened a bit recently.
Across the States, there were job gains in NSW (+9.8k) and QLD (+5.2). Falls were recorded in Vic (‑4.9k), SA (‑0.5k), WA (‑10.4k) and Tas (‑1.0k). Cutting through the monthly noise shows that Vic and NSW are driving national employment growth which reflects in part the strong residential upturn underway in both Sydney and Melbourne. Employment growth has slowed considerably in WA as the mining construction boom wanes.
Yesterday’s employment figures don’t shift the dial from a monetary policy perspective. They confirm that there is still plenty of spare capacity in the economy, but that jobs growth has been reasonable of late. Since the RBA published its February Statement on Monetary Policy, the monthly jobs figures have come in a little better than the Bank would have assumed in their forecasts. There has been reasonable jobs growth over the past three months and the unemployment rate has essentially tracked sideways.
Notwithstanding, we expect the RBA to reaffirm its dovish stance in tomorrow’s SMP while it assess the impact of rate cuts to date. But they are likely to say that employment growth has been a little stronger more recently.