Australian Employment Market Update
- Unemployment rate increased to 5.5%
- Employment increased by 34,700
- Monthly hours worked in all jobs decreased 94.2 million hours
- Participation rate increased to 65.7%
The latest labour force data released today by the Australian Bureau of Statistics shows that the Australian labour market was relatively steady in December 2017, with both relatively strong employment growth and a rising participation rate.
By Bill Mitchell
Unemployment rose due to the sharp rise in the participation rate following on the stronger employment growth. The teenage labour market however did not enjoy the benefits of this growth and went backwards. Further, underemployment rose sharply as did the broad labour underutilisation rate signifying that the Australian labour market still is a fair distance away from full employment.
Month by month employment growth
Employment growth in December was weaker in November but still positive with a net job increase of 34,700 (0.3 per cent). Full-time employment increased 15,100 and part-time employment increased 19,500.
The following graph shows the month by month growth in full-time (blue columns), part-time (grey columns) and total employment (green line) for the 24 months to December 2017 using seasonally adjusted data.
Overall: today’s result is steady.
The following table provides an accounting summary of the labour market performance over the last six months. The monthly data is highly variable so this Table provides a longer view which allows for a better assessment of the trends.
Full-time employment has risen by 114.6 thousand jobs (net) over the last 6 months, while part-time employment has risen by 94.8 thousand jobs. This reverses the 2016 and early 2017 bias which saw employment growth dominated by part-time job creation.
The situation over the last six months has been more balanced, but part-time employment is still disproportionately represented in the total employment change.
Overall there have been 209.4 thousand jobs (net) added in Australia over the last six months while the labour force has increased by 211 thousand. The result has been that unemployment has risen by 2 thousand.
In other words, while employment growth has lifted in the second-half of 2017, with participation rising, the labour force growth has outstripped the growth in net jobs. This is a common phenomenon as a recovery consolidates.
Unemployment rose by 20,500 to 730,6000
The official unemployment rate rose by 0.1 points to 5.5 per cent in December 2017, because the continuing rise in the participation rate outstripped the employment growth.
The combination of rising unemployment and rising employment is usually a sign of an improving economy and continues to be so until the participation rate has stabilised at a new cyclical high.
The following graph shows the national unemployment rate from February 1978 to December 2017. The longer time-series helps frame some perspective to what is happening at present.
After falling steadily as the fiscal stimulus pushed growth along, the unemployment rate slowly trended up for some months.
It is now still 0.6 points above the level it fell to as a result of the fiscal stimulus and 1.5 points above the level reached before the GFC began.
Conclusion: there is still considerable slack in the labour market that should be absorbed with fiscal stimulus.
Hours worked – fell by 4.2 million hours (0.2 per cent)
Hours worked fell by 4.2 million hours (0.2 per cent) in December 2017.
Over the previous four months, monthly hours growth has been consistently positive reflecting the recent bias to full-time employment growth.
The following graph shows the monthly growth (in per cent) over the last 24 months. The dark linear line is a simple regression trend of the monthly change – which depicts an modest upward trend – driven mostly by the outlier in May 2017.
Victoria lags amid jobs boom
Herald Sun – Eryk Bagshaw
Victoria risks being left behind as the country goes through an unprecedented jobs boom. New figure released on Thursday show employment has risen every month in a calendar year for the first time in for decades and possibly the first time in history after another 35,000 people ignored the summer slowdown and found jobs in December.
However, NSW is doing the heavy lifting, adding 140,000 jobs in 2017, outstripping the weight of its population, while Victoria, once the country’s jobs powerhouse is lagging behind after adding only 87,000 jobs.
The discrepancy is showing in the unemployment rates the two states with NSW now on the precipice of the natural rate of unemployment at 4.8 per cent. Victoria hit 6.1 per cent in December, up from 5.5 per cent in November.
Victorian Treasurer Tim Pallas said in December the state had been leading the nation in job creation since 2014, adding 250 jobs a day, but the latest figures show that extraordinary pace of growth has no slowed. “In three years, we have created more than 280,000 jobs and unprecedented pipeline of infrastructure projects to maintain employment momentum,” he said.
Acting Treasurer Robin Scott said yesterday the 10.8per cent increase in the past three years was the highest of any state in Australia. “This has encouraged more Victorians to enter the labour force, pushing the participation rate to record highs,” he said.