Australian Employment Market Update
Released 24.09.18
- Unemployment rate remained steady at 5.3%.
- Employment increased by 44,000
- Unemployment increased by 5,800
- Participation rate increased by 0.2 pts to 65.7%
- Monthly hours worked in all jobs increased by 0.6 million hours
The Australian Bureau of Statistics released the latest Labour Force, Australia, August 2018 shown that the Australian labour market showed better signs in August 2018 than in July but there are questions about the sensitivity of the results to the sample rotation used by the ABS to construct its survey.
Employment Trend
By Bill Mitchell
Taken together, unemployment rose slightly and the unemployment rate was steady
Employment increased 44,000 in August 2018
Employment growth was negative in July and returned to the several months of mediocrity that preceded June.
Employment increased 44,000 (0.3 per cent), full-time employment increased 133,700 and part-time employment decreased 10,200.
Which means that the overall estimates are sensitive to the characteristics of the different rotations and this helps explain why the employment estimate is so strong this month.
We deal with this sort of variability by examining longer term movements, which effectively smooth out these rotational effects.
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 August 2018 using seasonally adjusted data.
It gives you a good impression of just how flat employment growth had been leading into 2017.
Overall: today’s result signals a stronger labour market but caution needs to be exercised given the sampling variability.
The following table provides an accounting summary of the labour market performance over the last six months. As the monthly data is highly variable, this Table provides a longer view which allows for a better assessment of the trends.
Overall there have been just 139.3 thousand jobs (net) added in Australia over the last six months while the labour force has increased by 116.7 thousand. The result has been that unemployment has fallen by 22.6 thousand.
These aggregate changes signify a moderate labour market performance.
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.
The ratio rose by 0.1 points in August 2018 to 62.2 per cent (back to the June level) and remains well below pre-GFC peak in April 2008 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 up to August 2018 only).
It is clear that after some lean years, 2017 was a much stronger year if total employment is the indicator.
It is also clear that the labour market has weakened considerably in the first 8 months of 2018.
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 up to August 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 usually continues to grow.
Unemployment increased 5,800 to 708,800
The official unemployment rate remained steady at 5.3 per cent in August 2018 and total unemployment increased by 5,800 on the back of a rise in the participation rate.
The following graph shows the national unemployment rate from February 1978 to August 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 still 0.4 points above the level it fell to as a result of the fiscal stimulus and 1.3 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.
Broad labour underutilisation at 13.4 per cent
The results based on the Quarterly data for August 2018 are:
- Underemployment fell by 23.5 thousand and was estimated to be 8.1 per cent of the labour force (down from 8.5 per cent in the May-quarter).
- The total labour underutilisation rate (unemployment plus underemployment) was 13.4 per cent (down from 13.9 per cent).
- There were 1,089.1 thousand persons underemployed and a total of 1,836.2 thousand workers either unemployed or underemployed.
In terms of the quarterly data, the following graph plots the seasonally-adjusted underemployment rate in Australia since February 1978 to the August-quarter 2018 (blue line) and the broad underutilisation rate over the same period (green line).
The difference between the two lines is the unemployment rate.
You can see the three cyclical peaks corresponding to the 1982, 1991 recessions and the more recent downturn.
The other difference between now and the two earlier cycles is that the recovery triggered by the fiscal stimulus in 2008-09 did not persist and as soon as the ‘fiscal surplus’ fetish kicked in in 2012, things went backwards very quickly.
The two earlier peaks were sharp but steadily declined. The last peak fell away on the back of the stimulus but turned again when the stimulus was withdrawn.
If hidden unemployment (given the depressed participation rate) is added to the broad ABS figure the best-case (conservative) scenario would see a underutilisation rate well above 15 per cent at present. Please read my blog post – Australian labour underutilisation rate is at least 13.4 per cent – for more discussion on this point.
The next quarterly update will be for the November-quarter 2018 and will be published published in the December 2018 Labour Force release. In between those releases, the monthly estimates will guide our thinking.
Hours worked – increased by just 0.6 million hours (0.03 per cent).
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 a very flat 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.
And despite the relatively robust rise in full-time employment, monthly hours worked hardly moved in August 2018.
SEEK reveals Australia’s nomadic nurses favouring smaller states
Written by SEEK Employment Reports
- SEEK job ads up 4 per cent in August compared to this time last year
- Nurses favouring smaller states for job opportunities
New job ads nationally have grown 5.4 per cent in August compared to this time last year, according to the latest data from SEEK. This figure is the lowest YoY growth in national SEEK job ads since March 2017.
For the 13th consecutive month, Mining, Resources & Energy sector saw the greatest job ad growth across Australia growing 29 per cent in August 2018 compared to August 2017. Australia’s largest employing industries across the country demonstrated double digit growth in job ads for the year to August, including Healthcare & Medical (12 per cent), Hospitality & Tourism (12 per cent), Trades & Services (10 per cent) and Community Services & Development (10 per cent).
Kendra Banks, Managing Director ANZ, SEEK, said: “Despite growth slowing in recent months, national job ads remain 5.4 per cent higher than the previous year. So, although it is the weakest growth we’ve seen since March last year, it is indicative of a solid overall demand for labour. We are still seeing jobs growth well above the national average in some of our biggest employing sectors, pointing to a healthy and stable job market for Australia’s crucial industries.”
Fig 1: SEEK job ad YoY growth, August 2018 vs August 2017
Industry focus: Nursing
As reported by the ABS, the Healthcare & Medical and Social Assistance sector is Australia’s largest employer, currently accounting for 13 per cent of the total Australian workforce. The sector reached this milestone in 2010 when it surpassed the Retail sector and has continued to expand steadily ever since.
Fig 2: Healthcare & Medical sector overtakes Retail sector as largest employer
SEEK data reflects this growth with Healthcare & Medical job ads recording 12 per cent YoY growth in August 2018 compared to 2017. The top performing states for job ad growth in the sector this month were Tasmania (30 per cent), South Australia (24 per cent) and New South Wales, the sector’s biggest employer (21 per cent).
Nursing roles in good health
Nursing roles, which comprise 22 per cent of the Healthcare & Medical labour market, have been the biggest contributor to this sector’s growth in recent months.
The Aged Care sector is driving the growth in nursing roles, with particularly high growth in Tasmania, South Australia and Western Australia – states, which are recognised for having an aging population greater than the national average.
With the increased demand for healthcare services because of Australia’s growing and aging population, the Department of Health suggests Australia is approaching a ‘nursing shortage’ crisis of about 85,000 nurses by 2025, growing to 123,000 nurses by 2030.
However, SEEK data shows national nursing candidate availability has experienced steady growth in the last 12 months, outstripping national demand. This points to a greater supply of candidates in the market vying for positions and meaning it is getting easier to find nursing staff this year across the country.
Concern regarding the shortage of nurses also appears to be in contrast with the current nursing education environment. Domestic student enrolment in nursing courses has been strong, with an average yearly increase of 6% between 2010 and 2016, according to the Australian Department of Education and Training. This figure has increased to become on par with students enrolling in traditionally high-demand courses, such as ICT.
Dr Cathy Dickson, Program Director of Nursing and Health Science at Western Sydney University Online, said: “We are experiencing high demand for our online nursing course, reflecting the increase in domestic enrolments nationally. Many of our students are juggling busy family lives with part-time work. By providing access to flexible, high-quality education online we are enabling more people to realise their ambition of joining the nursing profession and helping to address the nursing shortage.”
Nursing nomads
SEEK data reveals that nationally, one in ten of nurses currently looking for work are willing to relocate to another state for work. This trend is led by Northern Territory where 41 per cent of nurses currently looking for job opportunities are looking interstate. Further, all nursing candidates nationally overwhelmingly favour the smaller states when looking interstate for roles, with candidates in New South Wales and Victoria more likely to move to Australian Capital Territory, Tasmania and Northern Territory.
Fig 3: Proportion of nursing candidates applying for jobs outside of their home state
While the Healthcare powerhouses of Victoria and New South Wales hold the larger share of jobs in the sector, some of the smaller states are seeing impressive growth across a number of specialised nursing roles, contributing to this trend of nursing candidates moving interstate.
Due to this trend, the smaller states of Australian Capital Territory, Tasmania and Northern Territory are all recording higher net gains in nursing candidate applications than their larger counterparts. The larger states of New South Wales and Western Australia are suffering the largest net losses.
Kendra Banks, Managing Director ANZ, SEEK, said: “We know that workers in the Healthcare & Medical sector place high importance on opportunities for career development when looking for a new role. Our nurses are looking for new experiences, and opportunities for professional development and to use a wide variety of different skills. Smaller states give health care professionals the chance to work with specific populations, such as indigenous communities in Northern Territory or the ageing population in Tasmania.”