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Jobs data: Something for everyone

Craig James
Friday, May 17, 2019

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There is seemingly something for everyone in the latest labour force data. The pessimists will focus on a slight rise in the jobless rate. The optimists will focus on another month of job gains and a record labour force participation rate. But what is the objective assessment of the data? It was a good, but not great set of numbers. Although, arguably it was a stronger outcome than most economists had expected. Job growth again exceeded expectations.

A softer result was to be expected given the extended holiday period in April and slowdown in business activity ahead of the election. Over four of the past five polls (including the current poll), trend job growth slowed. There is also the global economic slowdown caused by the USChina trade dispute. Full-time job growth was always going to correct after the out-sized job gain of near 50,000 in March. And then there is the small matter of hiring of election workers to further muddy the waters. The proportion of Australians in work or looking for work is at record highs. In fact the record participation rate applies to female workers and to both male and female workers combined. That means it is getting harder for employers to find the right staff for unfilled positions – fewer ‘suitable’ candidates are available.

Does this make it more or less likely that the Reserve Bank will cut rates in the months ahead? While the jobless rate edged up a touch, that result can be attributed to the pre-election economic slowdown. When the election is out of the way, business will get back to business as we have seen after previous polls. More people are finding work and more people are looking for work. The NSW trend jobless rate is still at record lows. So, the job market remains solid. The Reserve Bank will not make a knee-jerk response to the latest jobs figure. It will wait for clear air to make a judgement.

If interest rates were to be cut, August seems the earliest time period that this could occur – after two more months of job figures. It must be remembered that stimulus from tax cuts is likely to flow through to workers from July/August. And that could push any need for monetary stimulus out to November. 

What do the figures show? 

Employment rose for the ninth straight month, up by 28,400 in April after a revised 27,700 increase in jobs in March (previously reported as a 25,700 increase in jobs). Full-time jobs fell by 6,300, but part-time jobs rose by 34,700. Economists had tipped an increase in total jobs of around 15,000.

Annual job growth rose from 2.4% to a 10-month high of 2.6% (decade average 1.6%). Hours worked rose by 0.1% in the month to be up 1.9% over the year. In trend terms, hours worked rose 0.3% to be up 2.8% on the year.

The unemployment rate rose from 5.1% to 5.2% in seasonally adjusted terms. In trend terms the jobless rate was steady at 5.1%. Participation rate: The participation rate rose from 65.7% to a record high of 65.8%. In trend terms the 65.7% participation rate remained at record highs.

Unemployment across states in April: NSW 4.5% (March 4.3%); Victoria 4.9% (4.6%); Queensland 5.9% (6.1%); South Australia 6.1%(5.9%); Western Australia 6.1% (6.0%); Tasmania 6.8% (6.7%). In trend terms, Northern Territory 4.5% (4.5%); ACT 3.9% (3.8%).

State/Territory jobs: In seasonally adjusted terms, the largest increase in employment was in NSW (up 25,100 persons), followed by Western Australia (up 6,400 persons) and Queensland (up 5,400 persons). The only decrease was in Victoria (down 7,600 persons). 

The working age population rose by 25,900 in April to 20.54 million. Over the year the working age population rose by 362,400 or a 6-year high of 1.80%, but this is still down from the record 2.36% annual growth in December 2008. The monthly trend underemployment rate remained steady at 8.3%. The monthly underutilisation rate increased 0.1pts to 13.4%. The monthly seasonally adjusted underemployment rate increased 0.3pts to 8.5%. The monthly underutilisation rate increased 0.4 pts to 13.7%.

Domestic airfares

Business class airfares fell by 1% in May after declining by 6.6% in April – the biggest decrease in 4½ years. Business class airfares are down 9.2% on a year ago – falling at the fastest annual rate in six years. In smoothed terms, business class airfares fell by 1.4% in May to be down 7.6% on the year. Discount airfares are volatile month-to-month. In May, fares fell by 25.6% after lifting by 25.3% in April. Discount airfares are down 7.1% over the year to May. In smoothed terms, discount airfares fell by 2.3% in May to be down 3.9% on the year – the biggest fall in the annual growth rate in three years.  Restricted economy airfares fell by 0.5% in May, but were up by 6% on the year. In smoothed terms, restricted economy fares rose just 0.1% in May to be up by 5.5% on 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% 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 data on domestic and international aviation each month. The data is useful in tracking consumer spending and airline performance as well as broader economic activity.

What are the implications?

CommSec doesn’t expect a change in interest rates for the next few months. If there were to be a change in rates, rate cuts are more likely than rate hikes. We’ll know more when the Reserve Bank Governor speaks on Tuesday.

More people in jobs, means more spending power in the economy. And this spending power is underpinned by rising wages. In fact, today, SEEK indicated that annual wage growth of the available positions had lifted to 4.1 per cent – well above the official wage growth result for private sector employees of 2.4 per cent.

Published: Friday, May 17, 2019


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