Labour force
- Employment rose by 21,600 in December after a revised 39,000 increase in jobs in November (previously reported as a 37,100 increase in jobs). Full-time jobs fell by 3,000, but part-time jobs rose by 24,600. Economists had tipped an increase in total jobs of around 18,000.
- Hours worked rose by 1.3 per cent in the month to be up 1.5 per cent over the year.
- The unemployment rate fell from 5.1 per cent to a 7½-year low of 5.0 per cent in seasonally adjusted terms. Actually, to two decimal points, the jobless rate stood at 4.98 per cent in December. In trend terms the jobless rate remains at 5.0 per cent – a result that hasn’t been bettered in a decade.
- Participation rate: The participation rate eased from 65.7 per cent to 65.6 per cent. In trend terms the 65.6 per cent participation rate remained at record highs.
- Unemployment across states in December: NSW 4.3 per cent (November 4.3 per cent); Victoria 4.2 per cent (4.5 per cent); Queensland 6.1 per cent (6.3 per cent); South Australia 5.9 per cent (5.3 per cent); Western Australia 6.3 per cent (6.5 per cent); Tasmania 5.9 per cent (5.8 per cent). In trend terms, Northern Territory 5.0 per cent (4.9 per cent); ACT 3.6 per cent (3.6 per cent).
- State/Territory jobs: In seasonally adjusted terms, the largest increase in employment was in Queensland (up 11,600 persons), followed by Victoria (up 10,500 persons) and New South Wales (up 3,800 persons). The largest decrease was in Western Australia (down 15,300 persons).
A raft of companies is affected by the employment data but especially those dependent on consumer spending. Amongst stocks affected are Nine Entertainment, West Australian Newspapers, Seek Limited, McMillan Shakespeare and Skilled Group.
What does it all mean?
- The story hasn’t changed – the job market remains in strong shape. More people are looking for work; more people are finding work. And those in jobs are working longer hours. The seasonally adjusted results for the states continue to bob around but the trend estimates confirm the strong situation. The trend jobless rate has equalled decade lows and the participation rate has equalled record highs. More people than ever are looking for jobs and finding work.
- While full-time jobs have eased 10,000 in the past two months, in the previous five months full-time jobs soared by 164,000. So we should be careful about reading too much into the break-up of part and full-time positions.
- The strength in the east and south-east continues. We can quibble over a tenth of a per cent here and there. And debate whether we use trend or seasonally adjusted estimates. But broadly NSW and Victorian jobless rates are at the lowest levels since monthly estimates were compiled over 40 years ago in 1978.
- The seasonally adjusted unemployment rate in Victoria is 4.2 per cent, last equalled in August 2008 but a rate not bettered in records back to February 1978. In trend terms the jobless rate remained at 4.4 per cent, a level only bettered once, in August 2008.
- The NSW seasonally adjusted jobless rate remained at 4.3 per cent – a result last bettered in February 2008. In trend terms the jobless rate of 4.3 per cent hasn’t been bettered in records back to 1978.
- The big story is that job security remains strong. That is reflected in the fact that more people are keen to change positions, most likely securing a higher salary. In November, a record 644,800 were changing jobs or seeking other employment. More people getting jobs, more people changing jobs and more people secure in jobs all serve to lift spending across the economy.
- Leading indicators such as yesterday’s skilled job vacancies data (currently at 6½-year highs) point to further job gains and further tightening of the job market. There is continued anecdotal evidence that businesses are finding positions harder to fill. Wage growth is lifting and has potential to rise further in coming months.
- The Reserve Bank has good reason to be optimistic about the economy’s prospects in 2019. Business conditions are good, businesses are investing and employing more staff. The infrastructure boom is more than offsetting a slowdown in home building. But inflation remains under control. We expect the Reserve Bank to remain on the sidelines until much later in the year.
What do the figures show?
- Employment rose by 21,600 in December after a revised 39,000 increase in jobs in November (previously reported as a 37,100 increase in jobs). Full-time jobs fell by 3,000, but part-time jobs rose by 24,600. Economists had tipped an increase in total jobs of around 18,000.
- Annual job growth eased from 2.3 per cent to 2.2 per cent (decade average 1.6 per cent).
- Hours worked rose by 1.3 per cent in the month to be up 1.5 per cent over the year.
- The unemployment rate fell from 5.1 per cent to 5.0 per cent in seasonally adjusted terms (4.98 per cent to 2-decimal points). The jobless rate is the lowest in 7½ years – since June 2011. In trend terms the jobless rate hasn’t been lower in a decade at 5.0 per cent.
- Participation rate: The participation rate eased from 65.7 per cent to 65.6 per cent. In trend terms the 65.6 per cent participation rate remained at record highs.
- Unemployment across states in December: NSW 4.3 per cent (November 4.3 per cent); Victoria 4.2 per cent (4.5 per cent); Queensland 6.1 per cent (6.3 per cent); South Australia 5.9 per cent (5.3 per cent); Western Australia 6.3 per cent (6.5 per cent); Tasmania 5.9 per cent (5.8 per cent). In trend terms, Northern Territory 5.0 per cent (4.9 per cent); ACT 3.6 per cent (3.6 per cent).
- State/Territory jobs: In seasonally adjusted terms, the largest increase in employment was in Queensland (up 11,600 persons), followed by Victoria (up 10,500 persons) and New South Wales (up 3,800 persons). The largest decrease was in Western Australia (down 15,300 persons).
- The working age population rose by 24,800 in December to 20.39 million. Over the year the working age population rose by 340,000 (15-month high) or 1.70 per cent, but this is still down from the record 2.36 per cent annual growth in December 2008.
- The monthly trend underemployment rate increased less than 0.1 pts to 8.4 per cent. The monthly underutilisation rate remained steady at 13.4 per cent.
- The monthly seasonally adjusted underemployment rate decreased 0.1pts to 8.4 per cent. The monthly underutilisation rate decreased 0.2 pts to 13.3 per cent.
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?
- A strong job market has implications for a raft of businesses. The issue at present is that more and more firms are finding it hard to fill vacancies. And the reports cover a range of sectors such as hospitality, mining and construction.
- NSW and Victoria are effectively at full-employment. Further falls in jobless rate will probably only come at the cost of higher wages and prices.
- The job market is strong but inflation is contained. CommSec expects official interest rates to remain on hold until later in 2019.
