Labour force; Airfares
- Employment rose by 22,600 in April after a 700 job decline in March (previously reported as a rise of 4,900 jobs). Full-time jobs rose by 32,700 while part-time jobs fell by 10,000. Economists had tipped an increase in total jobs of around 20,000.
- Hours worked rose by 1.1 per cent in April and were up by 5.4 per cent over the year – the strongest annual gain in 18 years. Trend hours worked rose by 0.3 per cent in April and are up 3.3 per cent over the year – the strongest annual lift since October 2010.
- The unemployment rate rose from 5.5 per cent to 5.6 per cent. The participation rate rose from 65.5 per cent to 65.6 per cent.
- Unemployment across states in April: NSW 5.0 per cent (March 5.0 per cent); Victoria 5.3 per cent (5.3 per cent); Queensland 6.5 per cent (6.1 per cent); South Australia 5.9 per cent (5.6 per cent); Western Australia 6.5 per cent (6.9 per cent); Tasmania 6.0 per cent (6.1 per cent). In trend terms unemployment in the Northern Territory was steady at 4.3 per cent; ACT unemployment was steady at 4.0 per cent.
- State/territory jobs: In seasonally adjusted terms, the largest increase in employment was in New South Wales (up 27,100 persons), followed by Western Australia (up 8,300 persons) and South Australia (up 2,700 persons). The largest decrease was in Victoria (down 10,000 persons), followed by Queensland (down 8,200).
- Airfares: In smoothed terms (13 month moving average) business class airfares in May were up 0.7 per cent on the year. Discount fares were up by 4.3 per cent over the year. In real terms though the index of discount fares continues to hover near historic lows.
A raft of companies is affected by the employment data but especially those dependent on consumer spending. Amongst stocks affected are Fairfax, West Australian Newspapers, Seek Limited, McMillan Shakespeare and Skilled Group. Aviation activity data is important for airlines and hotels. The airfares data provides a guide on inflationary pressures as well as giving an insight into operating conditions for airlines.
What does it all mean?
- Normal service has been restored. After weakness in February and March, employment bounced back in April with job growth exceeding forecasts. More people are looking for work and most found jobs in the past month. But not all, so the jobless rate ticked up marginally. However the solid 1.1 per cent lift in hours worked highlights the underlying strength of both economic activity and the job market. Not only are there more people finding work, but those with jobs are working longer hours. The number of hours worked is up by 5.4 per cent over the year – the strongest increase in 18 years.
- It is worth reflecting over the past year: record workforce participation, a 2.7 per cent lift in job numbers and a slightly lower unemployment rate. And the icing on the cake is the number of hours worked. Clearly there are plenty of reasons to be encouraged.
- And clearly there is no pressing need for the Reserve Bank to change interest rate settings in any direction. The economy doesn’t need speeding up or slowing down. As the Reserve Bank noted this week, most people should view with confidence the fact that interest rates have been steady for so long.
What do the figures show?
Labour market
- Employment rose by 22,600 in April after a 700 job decline in March (previously reported as a rise of 4,900 jobs). Full-time jobs rose by 32,700 while part-time jobs fell by 10,000.
- Over the past year, jobs rose by 332,200 or 2.7 per cent. Employment growth has eased to more sustainable levels after the record job gain of 431,200 in the year to January (up 3.6 per cent). Over the past five years annual job growth has averaged 1.6 per cent.
- Hours worked rose by 1.1 per cent in April and were up by 5.4 per cent over the year – the strongest annual gain in 18 years. Trend hours worked rose by 0.3 per cent in April and are up 3.3 per cent over the year – the strongest annual lift since October 2010.
- The unemployment rate rose from 5.5 per cent to 5.6 per cent (trend 5.5 per cent). The participation rate rose from 65.5 per cent to 65.6 per cent (trend 65.7 per cent)
- Unemployment across states in April: NSW 5.0 per cent (March 5.0 per cent); Victoria 5.3 per cent (5.3 per cent); Queensland 6.5 per cent (6.1 per cent); South Australia 5.9 per cent (5.6 per cent); Western Australia 6.5 per cent (6.9 per cent); Tasmania 6.0 per cent (6.1 per cent). In trend terms unemployment in the Northern Territory was steady at 4.3 per cent; ACT unemployment was steady at 4.0 per cent.
- State/territory jobs: In seasonally adjusted terms, the largest increase in employment was in New South Wales (up 27,100 persons), followed by Western Australia (up 8,300 persons) and South Australia (up 2,700 persons). The largest decrease was in Victoria (down 10,000 persons), followed by Queensland (down 8,200).
- The working age population rose by 23,600 in April or 1.64 per cent to 20.18 million. Over the year the working age population rose by 325,700.
Airfares:
- The Bureau of Infrastructure, Transport and Regional Economics (BITRE) reports that business class airfares rose by 0.1 per cent in April after increasing by 0.2 per cent in April. Business class airfares stand 0.4 per cent lower than a year ago. But in smoothed terms, business class airfares are up 0.7 per cent on the year and have averaged gains of just 0.9 per cent over the past year.
- Discount fares fell by 0.8 per cent in April after volatile moves in the previous five months. Discount fares are actually down by 2.8 per cent over the year. In smoothed terms (13 month moving average), discount fares fell by 2.1 per cent in May – the fourth straight decline. But discount fares are up by 4.3 per cent over the year.
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 Bureau of Infrastructure, Transport and Regional Economics (BITRE) releases regular aviation data. The BITRE releases the Australian Domestic Airline Activity publication monthly and the Domestic Air Fares publication. The data provides insights on airline activity as well as trends in the broader Australian economy. If more people are flying, then it suggests businesses are more active and consumers are more confident.
What are the implications?
- The aim of any government or central bank is to create the conditions for people to find jobs. And to create the conditions so that people can work the number of hours they desire. Over the past year there has been good progress. But there are still too many people out of work. Jobless rates of 4-5 per cent need to be the norm, not the exception.
- The good news is that inflation is under control, allowing interest rates to stay at record lows. And the modest growth in wages is encouraging more businesses to hire staff.
- How is the economy doing? Employers are hiring more staff and getting existing workers to work longer hours. Clearly the economy has good momentum, and that is encouraging for the government’s budget position.
- The environment is positive for consumer-focussed businesses. There are more in work and there are more people working longer hours. Business profits have been rising, and this has led more firms to reward staff with bonus payments.
- CommSec expects official interest rates to remain solidly on hold for at least the next 4-5 months.