Jobs lost, but jobless rate still hits fresh 48-year low

Labour force; Average weekly earnings

• Employment fell by 40,900 in July (consensus: +25,000) with full-time jobs down by 86,900 while part-time jobs rose by 46,000.
• The unemployment rate fell from 3.5 per cent in June to 3.4 per cent in July (lowest since August 1974). To 2-decimal places the jobless rate stands at 3.38 per cent. The number of unemployed fell by 20,200.
• The participation rate fell from a record high of 66.8 per cent in June to 66.4 per cent in July.
• The underemployment rate fell from 6.1 per cent to 6.0 per cent in July. The underutilisation rate fell from 9.6 per cent in June to 9.4 per cent (lowest since April 1982). The youth jobless rate fell from 7.9 per cent to a record low of 7.0 per cent.
• Hours worked fell by 0.8 per cent to 1,840 million in July, but were up 3.4 per cent on a year ago.
• Unemployment rates across states/territories in July: NSW 3.3 per cent, equal record low (June: 3.3 per cent); Victoria 3.1 per cent, record low (3.2 per cent); Queensland 3.8 per cent, 14-year low (4.0 per cent); South Australia 4.0 per cent (4.3 per cent); Western Australia 3.2 per cent (3.4 per cent); Tasmania 3.7 per cent, record low (4.3 per cent); Northern Territory 3.5 per cent (3.7 per cent); ACT 3.3 per cent (3.1 per cent).
• Employment across states/territories in July: NSW -11,800; Victoria -18,600; Queensland -6,100; South Australia -3,400; Western Australia +6,400; Tasmania +500; Northern Territory +3,700; ACT -1,600.
• In seasonally adjusted terms, full-time average weekly ordinary time earnings (AWOTE) were $1,769.80 in May 2022, up by 1.9 per cent on a year ago. The national average annual wage for full-time employees is $92,030.

What does it all mean?

• The latest jobs data seemingly has something for everyone. Fewer people were looking for work in July, the number of people out of work fell, together with those in work, and the number of hours worked also dropped. The jobless rate also fell again to fresh 48-year lows. Some couldn’t work because of illness (Covid and influenza). Some couldn’t work because of flooding (NSW). School holiday timetables also affected job market results. Put all this down to the ‘noise’ of the monthly job figures, rather than suggestive of new themes or trends being developed.
• But it remains the fact that the job market is super-tight and that is unlikely to change in the short-term. Vacancies are just off 14-year highs and it is taking some time for people to fill the open positions. Some Aussies have left the workforce to set up their own businesses, others have retired and still others are unwell, affected by Covid and influenza. Migrant numbers remain low. It appears that some people are cautious about working abroad in the ‘living with Covid’ times and some countries have not fully opened foreign borders.
• It is possible that the jobless rate could fall to the ‘early threes’ or even late ‘twos’ – jobless rates near 3 per cent. So the tight job market will continue to place upward pressure on wage costs and complicate inflation fighting by the Reserve Bank.
• The stand-out result in the July jobs data was the youth jobless rate falling to a record low of 7.0 per cent. Governments over time have been trying to achieve this, but now it is a reality.
• While there are cyclical factors driving the jobless rate lower, there are also temporary factors related to Covid and even structural factors related to the exit of ‘Baby boomers’ from the workforce. (‘Baby boomers’ refer to those born between the years 1946-1962). In the 1990s, Baby boomers dominated the workforce but they have been retiring since 2006. The jobless rate averaged 7.6 per cent in the 1980s; averaged 8.8 per cent in the 1990s; and averaged 5.5 per cent in the noughties (2000-2009) and teens (2010-19). In other words, get used to seeing jobless rates in the ‘threes’.
• The average weekly earnings data provides another perspective on wages. The data confirms that wages are creeping, not leaping, higher. But the job market remains tight. So it will important to assess a range of indicators over coming months. Wage growth will lift, it is just a question of what trajectory it takes.

What do you need to know?

Labour force – July

• Employment fell by 40,900 in July (consensus: +25,000) with full-time jobs down by 86,900 while part-time jobs rose by 46,000.
• The unemployment rate fell from 3.5 per cent in June to 3.4 per cent in July (lowest since August 1974). To 2-decimal places the jobless rate stands at 3.38 per cent. The number of unemployed fell by 20,200.
• The participation rate fell from a record high of 66.8 per cent in June to 66.4 per cent in July.
• The underemployment rate fell from 6.1 per cent to 6.0 per cent in July. And the underutilisation rate fell from 9.6 per cent in June to 9.4 per cent (lowest since April 1982).
• The youth unemployment rate fell from 7.9 per cent in June to 7.0 per cent in July (lowest since August 2008).
• Hours worked fell by 0.8 per cent to 1,840 million in July, but were up 3.4 per cent on a year ago.
• Unemployment rates across states/territories in July: NSW 3.3 per cent, equal record low (June: 3.3 per cent); Victoria 3.1 per cent, record low (3.2 per cent); Queensland 3.8 per cent, 14-year low (4.0 per cent); South Australia 4.0 per cent (4.3 per cent); Western Australia 3.2 per cent (3.4 per cent); Tasmania 3.7 per cent, record low (4.3 per cent); Northern Territory 3.5 per cent (3.7 per cent); ACT 3.3 per cent (3.1 per cent).
• Employment across states/territories in July: NSW -11,800; Victoria -18,600; Queensland -6,100; South Australia -3,400; Western Australia +6,400; Tasmania +500; Northern Territory +3,700; ACT -1,600.

Average weekly earnings – May 2002

• In seasonally adjusted terms, full-time average weekly ordinary time earnings (AWOTE) were $1,769.80 in May 2022, up by 1.9 per cent on a year ago.
• Full-time total earnings rose by 2.1 per cent to $1,835.20 over the year to May and average weekly total earnings for all employees lifted 3.0 per cent to $1,344.70.
• Average weekly ordinary time wages (AWOTE) for full-time female workers rose by 2.5 per cent to $1,638.10 over the year to May with male wages up by 2.0 per cent to $1,872.90.
• Ordinary time wages for full-time workers across states & territories in seasonally adjusted terms over the year to November: NSW (up by 1.5 per cent); Victoria (flat); Queensland (up 3.5 per cent); South Australia (up by 3.4 per cent); Western Australia (up by 3.1 per cent); Tasmania (up by 3.1 per cent); Northern Territory (up by 0.9 per cent); ACT (up by 3.9 per cent).
• Nationally, the average annual wage in May 2022 was $92,030. Across states & territories, we have calculated average annual wages as follows: NSW $93,080; Victoria $91,036; Queensland $88,665; South Australia $84,391; Western Australia $100,740; Tasmania $81,562; Northern Territory $88,936; and the ACT $103,152.
• By industry, average wages rose most over the year to May in Information Media and Telecommunications (up by 6.4 per cent), followed by Electricity, Gas, Water and Waste Services (up by 5.5 per cent) and Public Administration and Safety (up by 4.1 per cent).
• Wages were weakest over the past year in Manufacturing (down by 0.7 per cent) and Wholesale trade (flat).
• The highest average annual wage can still be found in the Mining sector at $140,478 per year. Next highest is Information Media & Telecommunications ($116,288); Finance & Insurance Services ($111,722); and Professional, Scientific & Technical Services ($108,259).
• The lowest average annual wage is obtained by workers in the Accommodation and Food Services sector ($63,461); behind Retail Trade ($69,004); and “Other Services” ($69,872).