Australian Employment Market Update
- Employment increased 17,500 to 12,480,500. Full-time employment increased 64,900 to 8,533,600 and part-time employment decreased 47,400 to 3,946,900.
- Unemployment increased 8,900 to 734,100. The number of unemployed persons looking for full-time work increased 13,600 to 512,900 and the number of unemployed persons only looking for part-time work decreased 4,700 to 221,200.
- Unemployment rate increased by 0.1 pts to 5.6%
- Participation rate increased by less than 0.1 pts to 65.7%.
- Monthly hours worked in all jobs increased 21.2 million hours (1.2%) to 1,734.1 million hours.
The latest labour force data released yesterday by the Australian Bureau of Statistics for February 2018 shows that the Australian labour market labour market has weakened at the start of 2018. Employment growth was again very modest in February 2018 and participation only marginally rose.
By Bill Mitchell
The rise in unemployment was due to employment growth failed to keep up with the underlying population growth although the slight uptick in participation exacerbated this a bit.
Employment growth – positive but remains subdued
Employment growth was weaker again in January with a net job increase of just 16,000 (0.3 per cent). The notable feature was that Full-time employment decreased 49,800. Part-time employment increased 65,900. Underemployment rose as a result.
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 January 2018 using seasonally adjusted data.
It gives a good impression of just how flat employment growth had been leading into 2017 and the increasingly better performance in 2017.
Overall: today’s result signals a weaker labour market.
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.
Overall there have been 161.1 thousand jobs (net) added in Australia over the last six months while the labour force has increased by 172 thousand. The result has been that unemployment has risen by 10.3 thousand.
Given the variation in the labour force estimates, it is sometimes useful to examine the Employment-to-Population ratio (%) because the underlying population estimates (denominator) are less cyclical and subject to variation than the labour force estimates. This is an alternative measure of the robustness of activity to the unemployment rate, which is sensitive to those labour force swings.
The following graph shows the Employment-to-Population ratio, since February 2008 (the low-point unemployment rate of the last cycle).
It dived with the onset of the GFC, recovered under the boost provided by the fiscal stimulus packages but then went backwards again as the last Federal government imposed fiscal austerity in a hare-brained attempt at achieving a fiscal surplus.
The ratio began rising in December 2014 which suggested to some that the labour market had bottomed out and would improve slowly as long as there are no major policy contractions or cuts in private capital formation.
The series turned again as overall economic activity weakened.
However, since February 2017 when the ratio was 61 per cent, the situation has improved somewhat and the ratio rose by 0.2 points to 62 after being stationary between August and October.
It was unchanged in February 2018 at 62 per cent and remains a 0.9 percentage points below the April 2008 peak of 62.9 per cent.
To put the current monthly performance into perspective, the following graph shows the average monthly employment change for the calendar years from 2005 to 2018 (the 2018 result is for February only).
It is clear that after some lean years, 2017 was a much stronger year if total employment is the indicator.
To provide a longer perspective, the following graphs shows the average monthly changes in Total employment (upper panel), and Full-time and Part-time employment (lower panel) in thousands since 1978 (when the current dataset began).
The 2018 average is for January and February only so is not definitive.
The interesting result is that during recessions or slow-downs, it is full-time employment that takes the bulk of the adjustment. Even when full-time employment growth is negative, part-time employment continues to grow.
Unemployment increased 8,900 to 734,100
The official unemployment rate increased by 0.1 percentage points to 5.6 per cent in February 2018 on the back of the subdued employment growth.
The following graph shows the national unemployment rate from February 1978 to February 2018. 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 1.6 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 – increased 21.2 million hours (1.2 per cent)
The decline in working hours is consistent with the sharp fall in full-time employment and the rising underemployment as a result of the renewed bias towards part-time work.
This is now the second consecutive month that working hours have fallen in total.
Again, a sign of a weakening labour market.
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 – distorted somewhat by the outlier in May 2017 (the trend would have been more sharply downward without that positive spike).
You can see the pattern of the change in working hours is also portrayed in the employment graph – zig-zagging across the zero growth line although less so in 2017.
February job growth strong across the board
Written by SEEK Employment Reports
The latest data from SEEK has shown an increase in new job ads of 16.2 per cent compared to this time last year, driven largely by mining, agriculture and engineering. February also saw a 2 per cent increase in job ads month on month as businesses begin to ramp up planned hiring activity in the new year.
The strongest performing industries were Mining, Resources & Energy (45% growth), Farming, Animal & Conservation (32% growth), Information & Communication Technology (26% growth), Engineering and Trades & Services (both at 25% growth).
Kendra Banks, Managing Director SEEK ANZ, points to a number of key drivers, including unprecedented levels of government investment in infrastructure and noted that across Australia this is the ninth consecutive month of year on year double digit growth in SEEK new job ads.
A recent ABS report shows that the value of work yet to be done in the pipeline of public sector infrastructure projects is at a record high, and this is likely driving the increase in jobs in both Engineering (25%) and Trades and Services (25%).
“There are a number of key infrastructure projects underway across Australia, including the Perth-to-Forrestfield Airport Rail Link. We are seeing particularly strong demand for engineering skills in Western Australia, and job ads in this sector have increased 63% this month. Job growth in this sector is expected to continue.”
Farming, Animal & Conservation has also been a key area of job growth in February, with job ads up 32% compared to this time last year. While actual job numbers are still relatively low (a few hundred), this increase is significant for an industry facing a number of challenges.
“The increase in job ads across Victoria (40%), NSW (50%) and WA (54%) reflects solid growth in some sectors including sheep and wool, grain and cattle. Australian farmers are getting older, with the latest survey data from the ABS finding the average farmer is 56-years-old. As such it is not surprising that certain jobs are increasingly being outsourced due to both an aging workforce, and to improve efficiency.”
Once again, the only sector that saw a decrease in job ads this month was Advertising, Arts & Media with a drop of 7%.
Figure 1. Job ad growth across industries February 2018 compared to February 2017
STATES & TERRITORIES
All states and territories experienced positive monthly job ad growth in February, except the Northern Territory (-5.8 per cent) and South Australia (-2.9 per cent). All states and territories are still seeing growth in terms of annual trends. ACT experienced the strongest growth month on month with a 7 per cent increase in February driven by Government hiring kicking back into gear. This follows an 8.2 per cent drop in January over the summer break.
Figure 2. SEEK job ad growth by state and territories and top performing industries in February 2018 compared to 12 months ago