Jobs ease slightly: Employment fell by 1,000 in December after rising by 75,000 in November (previously reported as a rise of 71,400 jobs). Full-time jobs rose by 17,600 while part-time jobs fell by 18,500. Economists had tipped a 12,500 fall in jobs.
Hours worked rose by just 0.02 per cent. Hours worked are up 3.4 per cent over the year.
Jobless rate falls: The unemployment rate fell 0.1 percentage points on unrounded estimates to 5.8 per cent. To two-decimal points, unemployment fell from 5.84 per cent to a 26-month low of 5.76 per cent. The participation rate fell from 65.2 per cent to 65.1 per cent.
Unemployment across states in December: NSW 5.2 per cent (November 5.2 per cent); Victoria 5.9 per cent (6.1 per cent); Queensland 5.8 per cent (5.9 per cent); South Australia 7.2 per cent (7.3 per cent); Western Australia 6.3 per cent (6.6 per cent); Tasmania 6.8 per cent (6.6 per cent). In trend terms unemployment in the Northern Territory was 4.1 per cent (4.2 per cent); ACT unemployment 5.2 per cent (5.2 per cent).
What does it all mean?
Another month of job market data and another result that has surprised analysts. After the strongest back-to-back lift in jobs in 28 years – 130,000 jobs created – employment only fell by 1,000 in December. Economists were tipping a 12,500 fall in jobs and were wrong…again.
What is being missed is the strength of demand in the services sector. Consumers are spending, buoyed by the gains in home prices over the past year and the boost to spending power provided by the lower petrol price. And then there are the demographics – an ageing population continues to create jobs in the healthcare sector. And the strength of the tourism sector is being under-estimated. Almost half a million additional tourists visited our shores in 2015 compared with a year ago. And the lower Aussie dollar will continue to drive the positive trends in tourism. Of course, home construction is an additional factor underpinning spending. As more homes are built, demand for curtains, carpets, lights, TVs and other household items will increase. And that will lead to more retail jobs.
While the sharemarket is easing, it isn’t due to weakness in the Aussie economy, rather jitters across the globe about all manner of things.
CommSec expects that the unemployment rate will continue to drift lower over 2015 towards 5.5 per cent.
Global factors mean there is the risk of lower domestic interest rates. But domestic factors certainly aren’t agitating for a rate cut – apart from disinflationary forces – and that is a global trend as well as occurring in Australia.
What do the figures show?
Labour force:
Employment fell by 1,000 in December after rising by 75,000 in November (previously reported as a rise of 71,400 jobs). Full-time jobs rose by 17,600 while part-time jobs fell by 18,500. Economists had tipped a 12,500 fall in jobs.
Hours worked rose by just 0.02 per cent. Hours worked are up 3.4 per cent over the year.
Jobless rate falls: The unemployment rate fell 0.1 percentage points on unrounded estimates to 5.8 per cent. To two-decimal points, unemployment fell from 5.84 per cent to a 26-month low of 5.76 per cent. The male jobless rate held at a 21-month low of 5.7 per cent and the female jobless rate fell from 6.0 per cent to a 2-year low of 5.8 per cent.
The participation rate fell from 65.2 per cent to 65.1 per cent.
A total of 301,300 jobs were added over 2015, the strongest calendar year gain in nine years (since 2006: 324,600 jobs created). The annual growth rate eased from of 3.0 per cent to 2.6 per cent. In trend terms, employment has risen for 25 consecutive months.
The working age population rose by 22,300 in December and by 280,800 over the past year. The working age population is up 1.47 per cent over the past year – the strongest growth in 11 months.
Unemployment across states in December: NSW 5.2 per cent (November 5.2 per cent); Victoria 5.9 per cent (6.1 per cent); Queensland 5.8 per cent (5.9 per cent); South Australia 7.2 per cent (7.3 per cent); Western Australia 6.3 per cent (6.6 per cent); Tasmania 6.8 per cent (6.6 per cent). In trend terms unemployment in the Northern Territory was 4.1 per cent (4.2 per cent); ACT unemployment 5.2 per cent (5.2 per cent).
Jobs across states and territories in December: NSW -5,300; Victoria -12,900; Queensland +6,700; South Australia -1,000; Western Australia +8,000; Tasmania -3,800. Trend terms: Northern Territory-300; ACT +700.
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.
What are the implications?
There are still the sceptics. But job ads are rising; job vacancies are rising; above-average retail spending is being recorded; tourist arrivals are at record highs; and home building is at record highs. So it is conceivable that jobs are being created.
Not only are jobs being created but Aussies are working longer hours with annual growth at 3.4 per cent – above that of job growth. But to date the lift in employment and hours worked hasn’t been reflected in more pay with wage growth only around 2.25 per cent. This is the area to watch in 2016.
The jobs data is positive for consumer-dependent businesses. More are in work while job security has also been boosted.
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