Job market recovery gains momentum
Employment rose by 90,000 in November (consensus: +40,000) after increasing by an upwardly-revised 180,400 jobs in October (previously reported as a 178,800 lift in jobs). Full-time jobs rose by 84,200 and part-time jobs rose by 5,800.
The unemployment rate fell from 7.0 per cent to 6.8 per cent in November (consensus: 7.0 per cent).
Hours worked rose from 1.709 million hours to 1.752 million hours (up 2.5 per cent) but were down 1.2 per cent over the year.
Participation rate: The participation rate lifted from 65.8 per cent to 66.1 per cent in November.
Spare capacity: In November, the underutilisation rate fell from 17.4 per cent to 16.2 per cent. The underemployment rate fell from 10.4 per cent to 9.4 per cent.
Unemployment across states in November: NSW 6.5 per cent (October: 6.5 per cent); Victoria 7.1 per cent (7.3 per cent); Queensland 7.7 per cent (7.7 per cent); South Australia 6.2 per cent (7.0 per cent); Western Australia 6.4 per cent (6.6 per cent); Tasmania 7.9 per cent (8.3 per cent); Northern Territory 5.9 per cent (5.6 per cent); ACT 4.0 per cent (3.9 per cent). Most jobs were added or reinstated in Victoria (+74,000), followed by NSW (+23,900) and Western Australia (+11,400).
A raft of companies is affected by the employment data but especially those dependent on consumer spending.
What does it all mean?
• Australia’s job market recovery continues. But scarring in the labour market remains with 942,100 Aussies still jobless in November – just below the record high of 1 million people in July. Total employment is still 103,300 below pre-pandemic levels in February. The unemployment rate remains elevated at 6.8 per cent with jobless rates above this level in Tasmania, Queensland and Victoria.
• That said, conditions in the job market are improving after the easing of government imposed Covid-19 restrictions. Government intervention via wage subsidies – such as JobKeeper – prevented a huge lift in the jobless rate when compared to the large contraction in economic activity in the June quarter. In fact, the unemployment rate may have already peaked at 7.5 per cent in July.
• But the healing has just begun with the unemployment rate unlikely to fall back to pre-recession levels for at least 12 months or more. The good news is that the unemployment rate eased from 7.0 per cent to 6.8 per cent in November with more jobs (+90,000) being recovered or added after the nationwide lockdown saw 872,100 jobs lost in April and May.
• High-frequency indicators of the labour market point to employment gains ahead, as the post-lockdown economic recovery continues in Victoria. In an encouraging development, SEEK job ads rose by 8.6 per cent in November and are up – incredibly – by 1 per cent over the year! Victorian job ads surged 20.2 per cent – amazingly posting a third successive month of double-digit growth. And preliminary skilled internet job vacancies rose 7.8 per cent in November, while ANZ’s job ads gauge surged 13.9 per cent in the month. Job ads are now above pre-pandemic levels in all states in territories except for NSW, the ACT and Victoria.
• Importantly recent surveys of Aussie businesses suggest that hiring workers has become more challenging as the economy re-opens and recovers. International border closures are also contributing to an emerging skills shortage in some occupations. In fact, the Bureau of Statistics (ABS) yesterday reported, “One in five (21 per cent) employing businesses reported [in its December survey] they were having difficulty finding suitably skilled or qualified staff for jobs. Businesses reported having difficulty finding suitably skilled tradespersons, hospitality workers and STEM professionals. Other in demand jobs included labourers, drivers and managers.”
• ACA Research’s COVID-19 Business Sentiment Tracker of SME’s on November 22, 2020 highlighted that 84 per cent of SME’s that are hiring are finding it difficult to fill roles. And 61 per cent of SMEs reported that, “not enough candidates are applying” with 51 per cent suggesting that there is a “lack of skilled/qualified candidates”.
• Reserve Bank policymakers recently noted, “the recovery in the labour market was more advanced than expected,” but also reiterated that “addressing the high rate of unemployment is a national priority.” Of course the outlook for the labour market remains highly dependent on Australia’s continuing success at supressing the virus with a vaccine rollout likely in the coming months. That said, policy settings will remain expansionary for an extended period to support the nascent job market recovery. Skills shortages, worries about the tapering of the JobKeeper scheme and the impact on business confidence from ongoing trade tensions with China present some near-term risks to business hiring intentions.
Published by Ryan Felsman, Senior Economist, CommSec