Aussie jobless rate at 10-year low; Queensland population growth rate at 5-year high

Labour force; Population

• Employment rose by 4,600 in February after a revised 38,300 increase in jobs in January (previously reported as a 39,100 increase in jobs). Full-time jobs fell by 7,300, but part-time jobs rose by 11,900. Economists had tipped an increase in total jobs of around 15,000.
• Hours worked rose by 0.2 per cent in the month to be up 2.2 per cent over the year.
• The unemployment rate fell to a 10-year low of 4.9 per cent in seasonally adjusted terms. In trend terms the jobless rate remained steady at a 10-year low of 5.0 per cent (previously 5.1 per cent).
• Participation rate: The participation rate fell 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 February: NSW 4.3 per cent (January 3.9 per cent); Victoria 4.8 per cent (4.6 per cent); Queensland 5.4 per cent (6.1 per cent); South Australia 5.7 per cent (6.3 per cent); Western Australia 5.9 per cent (6.9 per cent); Tasmania 6.5 per cent (7.0 per cent). In trend terms, Northern Territory 4.9 per cent (4.9 per cent); ACT 3.5 per cent (3.5 per cent).
• Population: Australia’s population expanded by 395,101 people over the year to September 2018 to 25,101,917 people. Overall, Australia’s annual population growth rate rose from 1.59 to 1.60 per cent. Queensland’s annual population growth rate is at 5-year highs of 1.74 per cent and Tasmania’s annual population growth rate is at 9-year highs of 1.15 per cent.

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. The demographic data on jobs provides insights on the job market, wages and prices, and ultimately on interest rates.

What does it all mean?

• The Aussie jobless rate fell to decade lows in February at 4.9 per cent in seasonally adjusted terms. In trend terms, a healthy 290,700 people secured jobs over the past 12 months. In Queensland, the unemployment rate fell to 6½-year lows of 5.4 per cent in seasonally adjusted terms.
• Underneath the bonnet, there was some weakness. The participation rate fell a little and full-time jobs were down after a blockbuster result in January. Seasonality may have played its part.
• Last year, Reserve Bank policymakers were fixated about the wage ‘puzzle’. With strong jobs growth failing to translate into pay rises and stoke inflation, economists pondered why the “old” Phillips Curve relationship between unemployment and prices had seemingly broken down.
• Fast forward to 2019 and the same Reserve Bank policymakers are now grappling with a different ‘puzzle’ – tensions between strength in the labour market and slowing economic growth.
• And as highlighted in its minutes on Tuesday, Board members said that developments in the labour market were “particularly important” to the economic outlook and interest rate settings.
• With that in mind, February’s weaker-than-expected jobs growth may increase market expectations for an interest rate cut, particularly on the back of a weak run of data releases.
• GDP growth, retail sales, business/consumer confidence, building approvals, home prices, services activity and construction gauges have all underwhelmed in recent weeks, pointing a loss of economic momentum.
• But this is no different to most developed economies globally, with central banks adopting a ‘dovish’ and data-dependent policy pivot as they cautiously await the resolutions of the China-US trade war and Brexit.
• The concern for Aussie policymakers is that jobs growth and hiring appears to have peaked in 2018. Leading indicators of jobs growth such as the ANZ and SEEK job ads series and Department of Small Business and Jobs’ skilled internet job vacancies survey have eased from 6-7 year highs.
• While business conditions still remain broadly supportive, confidence is at 3-year lows. Slowing global and domestic demand, a weak retail environment, the drought, property downturn, political uncertainty and increased difficulties for small businesses in obtaining credit from banks may hinder firms’ investment and hiring intentions.
• Either way, the NAB employment index currently implies average monthly jobs gains of 19,000 this year, so the unemployment rate appears set to stabilise around 10-year lows of 5 per cent in the near term. With over one million Aussies working two jobs and more indicating a desire to work more hours, as represented by the still-high underemployment rate, there is still spare capacity in the labour market. As evidenced by the US and UK jobs markets, Aussie wages growth is unlikely to reach 3-3½ per cent until the labour market tightens to the extent that the national unemployment rate is closer to 4 per cent.

What do the figures show?

• Employment rose by 4,600 in February after a revised 38,300 increase in jobs in January (previously reported as a 39,100 increase in jobs). Full-time jobs fell by 7,300, but part-time jobs rose by 11,900. Economists had tipped an increase in total jobs of around 15,000.
• Annual job growth rose from 2.2 per cent to 2.3 per cent (decade average 1.6 per cent).
• Hours worked rose by 0.2 per cent in the month to be up 2.2 per cent over the year.
• The unemployment rate fell to a 10-year low of 4.9 per cent in seasonally adjusted terms. In trend terms the jobless rate remained steady at a 10-year low of 5.0 per cent (previously 5.1 per cent).
• Participation rate: The participation rate fell 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 February: NSW 4.3 per cent (January 3.9 per cent); Victoria 4.8 per cent (4.6 per cent); Queensland 5.4 per cent (6.1 per cent); South Australia 5.7 per cent (6.3 per cent); Western Australia 5.9 per cent (6.9 per cent); Tasmania 6.5 per cent (7.0 per cent). In trend terms, Northern Territory 4.9 per cent (4.9 per cent); ACT 3.5 per cent (3.5 per cent).
• State/Territory jobs: In seasonally adjusted terms, the largest increases in employment were in Queensland (up 6,400) and Victoria (up 5,700 persons), followed by South Australia (up 3,800 persons) and Western Australia (up 2,800 persons). The largest decrease was in New South Wales (down 5,800 persons).
• The working age population rose by 39,000 in February to 20.48 million. Over the year the working age population rose by 357,000 or a 6-year high of 1.77 per cent, but this is still down from the record 2.36 per cent annual growth in December 2008.
• The monthly trend underemployment rate fell from 8.2 per cent to 4½-year lows of 8.1 per cent in February. The monthly underutilisation rate fell from 13.2 per cent to 5½-year lows of 13.1 per cent.
• The monthly seasonally adjusted underemployment rate was steady at 4½-year lows of 8.1 per cent in February. The monthly underutilisation rate decreased by 0.2 percentage points to 13.0 per cent – the lowest in 5½ years.

Population Statistics

• Australia’s population expanded by 395,101 people over the year to September 2018 to 25,101,917 people. Overall, Australia’s annual population growth rate rose from 1.59 to 1.60 per cent. Natural increase contributed 39.2 per cent to the annual lift in population with 60.8 per cent from migration.
• Over the past year population growth was strongest in Victoria (2.20 per cent), followed by the ACT (1.93 per cent), Queensland (1.74 per cent), NSW (1.51 per cent), Tasmania (1.15 per cent), Western Australia (0.88 per cent), South Australia (0.79 per cent) and the Northern Territory (-0.18 per cent).
• Tasmania’s annual population growth rate at 1.15 per cent is the highest since June 2009.
• Australia’s population grew by 109,057 people over the September quarter, after growing by 92,160 people in the June quarter.
• A total of 240,100 people migrated to Australia over year to September, up from 237,200 people in the year to June. Migration growth is down from the peak of 315,700 migrants in the year to December 2008.
• There were 312,600 babies born in the year to September. And there were 157,500 deaths in the past year, down 3,500 on the year to June 2018.
• Natural increase for the year September was 155,100, the most in four years, up by 5.2 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.
• Demographic Statistics are issued by the Bureau of Statistics each quarter. The figures include estimates of births, deaths, in-bound and out-bound migration movements and estimates of population change by State.

What are the implications?

• Today’s jobs report was mixed. While the headline job numbers disappointed, the Aussie jobless rate has a ‘4’ handle in front of it. The unemployment rate is the equal lowest in a decade.
• Another positive development was that unemployment fell in the mining states of Queensland and Western Australia. Full-time jobs growth over the past two years has been strong in the Sunshine State, perhaps why annual population growth has lifted to 5-year highs.
• But a fall in job creation in NSW in February is a concern, given falling home prices and household spending. The unemployment rate rose from the lowest levels since the 1970s.
• Aussies still want to work more hours as evidenced by the still-elevated underemployment rate of near 8 per cent. So there is still spare capacity in the Aussie labour market. The national unemployment rate needs to be closer to 4 per cent to lift wages growth and stir inflation.
• The Federal Government is advocating a ‘new’ population plan, directing skilled overseas migrants to regional areas. Tassie may soon be ‘bursting at the seams’, so perhaps a focus on the ‘Top End’ could balance it out. Annual population growth in Northern Territory at -0.18 per cent in September is the weakest in 15 years.
• CommSec doesn’t expect a change in interest rates for the foreseeable future.