Job market: Light in the tunnel gets brighter  


Labour Force

  • Employment rose by 178,800 in October (survey forecast: -27,500) after falling by an upwardly-revised  42,500 jobs in September (previously reported as a 29,500 fall in jobs). Full-time jobs rose by 97,000 and part-time jobs rose by 81,800.
  • The unemployment rate rose from 6.9 per cent to 7.0 per cent in October  (survey forecast: 7.1 per cent).
  • Hours worked rose from 1.690 million hours to 1.711 million hours (up 1.2 per cent) but were down 3.4 per cent over the year.
  • Participation rate: The participation rate lifted from 64.9 per cent to 65.8 per cent in October.
  • Spare capacity: In September, the underutilisation rate fell from 18.3 per cent to 17.4 per cent. The underemployment rate fell from 11.4 per cent to 10.4 per cent.
  • Unemployment across states in October: NSW 6.5 per cent (September 7.2 per cent); Victoria 7.4 per cent (6.7 per cent); Queensland 7.7 per cent (7.6 per cent); South Australia 7.0 per cent (6.9 per cent); Western Australia 6.6 per cent (6.7 per cent); Tasmania 8.2 per cent (7.6 per cent); Northern Territory 5.7 per cent (4.7 per cent); ACT 3.9 per cent (3.8 per cent).
  • In October 2020, none of the states and territories recorded decreases in the number of employed people. A record 81,600 jobs were added or reinstated in Victoria and a record 8,700 jobs were added or reinstated in the ACT in the month.

A raft of companies is affected by the employment data but especially those dependent on consumer spending.

What does it all mean?

  • Giddy yet? One month, jobs are down by over 40,000 people. The next month, employment has rebounded by almost 180,000 people. Clearly these are not your normal times with lockdowns complicating the analysis of what is usually far less volatile economic data.
  • The complication in the latest data is that self-employed workers or owner-managers are flooding back to work from ‘outside the labour force’. But employees are taking longer to resume work. The ABS note “Differences in employment continued to be seen between employees, for whom employment was 2.4 per cent lower than March, and non-employees, for whom employment was 1.2 per cent higher than March, in original terms.”
  • While there is still plenty of water to flow under the bridge, it is clear – as the Reserve Bank Governor noted this week – that Australians have much to be thankful for. And while there is still work ahead to get the jobless rate down, there are grounds for optimism. The recent sharp rebound in job ads and vacancies will lead to future hiring – the lag reflecting the usual hiring process.
  • The outlook for the job market continues to improve. Skilled job vacancies rose 6.2 per cent in October and were higher over the year in five of the states and territories. And SEEK report that job ads rose by 8.5 per cent in October after a 9.2 per cent lift in September.  Victoria is now striding out of lockdown and it is hoped that the South Australian lockdown will be short, sharp and effective.
  • As we have previously noted, we expect that the jobless rate has already peaked – the 7.5 per cent jobless rate recorded back in July. Unemployment is expected to ease to 5.75 per cent by end-2021 and reach 5.0 per cent by end-2022. Clearly there are short-term risks with the potential for new virus outbreaks or second waves. And second waves continue to lift virus case numbers to new highs in Europe and the US. But at the same time the news remains encouraging concerning  the roll-out on what now appears a number of vaccines in 2021.
  • The Reserve Bank believes that getting more people in jobs is an “important national priority”. And while the Reserve Bank used to be more forward looking, in the pandemic it is focussed on what is happening to jobs and inflation now. The jobless rate is 7 per cent – it is still too high. The RBA will only be happy when the jobless rate is closer to 5 per cent.

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