Jobs added for 35 consecutive months
Victorian population growth rate hits 6½-year low
Labour force; Population; Domestic air travel
Employment rose for the 35th consecutive month, up by 34,700 jobs in August. But full-time jobs fell by 15,500 with part-time jobs up by 50,200. Economists had tipped an increase in total jobs of around 15,000.
Hours worked rose 0.2 per cent in August to be up 2.0 per cent over the year. In trend terms, hours worked were up 1.7 per cent on the year.
The unemployment rate rose from 5.2 per cent in July to 5.3 per cent in August in seasonally adjusted and trend terms – the highest level in 12 months.
Participation rate: The participation rate rose from 66.1 per cent in July to a fresh record-high 66.2 per cent in August in both seasonally adjusted and trend terms.
Unemployment across states in August: NSW 4.3 per cent (July 4.4 per cent); Victoria 4.9 per cent (4.8 per cent); Queensland 6.4 per cent (6.4 per cent); South Australia 7.3 per cent (6.9 per cent); Western Australia 5.8 per cent (5.9 per cent); Tasmania 6.4 per cent (6.0 per cent). In trend terms, Northern Territory 5.1 per cent (5.0 per cent); ACT 3.5 per cent (3.6 per cent).
Population: Australia’s population expanded by 388,800 people over the year to March 2019 to 25,287,400 people. Overall, Australia’s annual population growth rate fell from 1.60 to 1.56 per cent. Victoria’s annual population growth rate of 2.08 per cent is the slowest pace in 6½ years.
People flying: There were 5.70 million passengers carried on Australian domestic commercial aviation (including charter operations) in July 2019, an increase of 0.9 per cent on July 2018. Rolling annual passenger growth on the Sydney-Melbourne route is at 7-year lows.
A raft of companies is affected by the employment data but especially those dependent on consumer spending. The demographic data on jobs provides insights on the job market, wages and prices, and ultimately on interest rates. Domestic aviation data is a key indicator for airline and airport performance as well as the broader economy.
What does it all mean?
• After holding steady for four successive months, the Aussie jobless rate ticked-up to 5.3 per cent in August. While a 35th consecutive month of jobs growth was posted, the underlying composition was broadly weak. The participation rate rose to fresh record highs of 66.2 per cent, pushing up the jobless rate, once again highlighting the challenges that policymakers have in engineering a tightening of Australia’s job market and lifting wages.
• Despite August’s reversal, almost 186,000 of the near 311,000 jobs added over the past year have been full-time jobs, contrary to the often widely-held belief that the majority of jobs added are casual or part-time. In fact, analysis by Deloitte shows that 45 per cent of Aussies have been happily employed by their current employer for more than five years, despite technological disruption and the rise of the ‘gig’ economy.
• That said, unemployment rates vary significantly across Aussie states, territories and regions, reflecting a two-speed job market and economy. Jobless rates in the most populous states of New South Wales and Victoria remain below 5 per cent, soaking up the bulk of annual job gains. In fact, the New South Wales jobless rate actually fell back to 4.3 per cent in August.
• While this is “good” news, the “bad” news is that leading indicators of jobs growth – particularly in Sydney and Melbourne – are weakening. In fact, according to SEEK, job ads in Sydney are down 16.9 per cent and job vacancies are lower by 11.9 per cent in Melbourne over the year to August. Ads are also down by a worrying 8.9 per cent in Brisbane, pointing to higher unemployment rates ahead, given strong worker participation and solid population growth.
• Elsewhere, unemployment rates remain unacceptably high in South Australia (now over 7 per cent), Western Australia, Queensland and Tasmania. And joblessness in Australia’s outback – afflicted by drought – remains a scourge.
• The Reserve Bank has responded to concerns about higher unemployment by cutting interest rates in June and July. With the economy growing at the slowest annual growth rate in a decade and jobs being lost in the construction sector amid a slowdown in residential building activity, it appears that additional policy stimulus will be required.
• Rising underemployment and underutilisation imply that little progress has been made in tightening the labour market since February when the jobless rate fell to near 8-year lows at 4.95 per cent. Female and older Australian worker participation is near record highs. Aussies – particularly those in casual and part-time work – have expressed a desire to work more hours. But with population growth remaining firm, wages growth will likely remain tepid, given spare capacity in the labour market.
What do the figures show?
• Employment rose for the 35th consecutive month, up by 34,700 jobs in August. But full-time jobs fell by 15,500 with part-time jobs up by 50,200. Economists had tipped an increase in total jobs of around 15,000.
• Hours worked rose 0.2 per cent in August to be up 2.0 per cent over the year. In trend terms, hours worked were up 1.7 per cent on the year.
• The unemployment rate rose from 5.2 per cent in July to 5.3 per cent in August in seasonally adjusted and trend terms – the highest level in 12 months.
• The participation rate rose from 66.1 per cent in July to a fresh record-high 66.2 per cent in August in both seasonally adjusted and trend terms.
• Unemployment across states in August: NSW 4.3 per cent (July 4.4 per cent); Victoria 4.9 per cent (4.8 per cent); Queensland 6.4 per cent (6.4 per cent); South Australia 7.3 per cent (6.9 per cent); Western Australia 5.8 per cent (5.9 per cent); Tasmania 6.4 per cent (6.0 per cent). In trend terms, Northern Territory 5.1 per cent (5.0 per cent); ACT 3.5 per cent (3.6 per cent).
• State/Territory jobs: In seasonally adjusted terms, from July 2019 to August 2019, the largest increases in employment were in Victoria (up 20,300 persons) and New South Wales (up 16,700 persons). The largest decrease was in Queensland (down 7,200 persons).
• The working age population rose by 31,900 in August to 20.625 million. Over the year, the working age population rose by 334,300 or 1.65 per cent. But this is still down from the record 2.36 per cent annual growth in December 2008.
• The monthly trend underemployment rate remained steady at 8.5 per cent. The monthly underutilisation rate increased by less than 0.1 percentage points to 13.8 per cent.
• The monthly seasonally adjusted underemployment rate increased 0.2 percentage points to 8.6 per cent. The monthly underutilisation rate increased 0.1 percentage points to 13.8 per cent.
• Australia’s population expanded by 388,800 people over the year to March 2019 to 25,287,400 people. Overall, Australia’s annual population growth rate eased from 1.60 to 1.56 per cent. Natural increase contributed 35.8 per cent to the annual lift in population with 64.2 per cent from migration.
• Over the year to March, population growth was strongest in Victoria (2.08 per cent), followed by Queensland (1.77 per cent), the ACT (1.66 per cent), NSW (1.43 per cent), Tasmania (1.21 per cent), Western Australia (1.00 per cent), South Australia (0.85 per cent) and the Northern Territory (-0.43 per cent).
• By state, Victoria’s annual population growth rate of 2.08 per cent is the slowest pace in 6½ years.
• Annual population growth in South Australia (up 0.85 per cent) and Western Australia (up 1.00 per cent) are both at 4-year highs.
• Australia’s population grew by 118,581 people over the March quarter – the most in 12 months – after growing by 78,430 people in the December quarter.
• A total of 249,700 people migrated to Australia over year to March, up from 248,200 people in the year to December. Migration growth is down from the peak of 315,700 migrants in the year to December 2008.
• There were 298,100 babies born in the year to March, down from 303,700 births over the year to December.
• And there were 159,000 deaths in the past year, up by 2,600 on the year to December.
• Natural increase (births less deaths) for the year to March was 139,100, down by 2.2 per cent.
• There were 5.70 million passengers carried on Australian domestic commercial aviation (including charter operations) in July 2019, an increase of 0.9 per cent on July 2018.
• There were 5.45 million passengers carried on regular passenger transport (RPT) flights in July 2019, an increase of 0.2 per cent on July 2018.
• For the year ending July 2019 there were 60.97 million RPT passengers, an increase of 0.1 per cent on the year ending July 2018.
• Capacity, measured by available seat kilometres (ASKs), increased by 1.5 per cent compared with July 2018 to a total of 7.93 billion. With RPT passenger traffic increasing at a slower rate than capacity the industry wide load factor (RPKs/ASKs) decreased from 83.2 per cent in July 2018 to 82.3 per cent in July 2019.
• On the key Melbourne-Sydney route, passenger numbers were down by 2.1 per cent on a year ago. On a rolling annual total (smoothed) basis, annual passenger growth fell by 0.8 per cent – the biggest decline in 7 years.
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 per cent 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.
• Demographic Statistics are issued by the Bureau of Statistics each quarter. The figures include estimates of births, deaths, in-bound and out-bound migration movements and estimates of population change by State.
• 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?
• The Reserve Bank warned in its September 3 monetary policy Board minutes (released on Tuesday) that “forward-looking indicators had continued to suggest that employment growth would moderate over the following six months.” Now with the national jobless rate edging up to 5.3 per cent, accompanied by record workforce participation, it appears that policymakers will look to cut interest rates as soon as October.
• Aussies want to work more hours as evidenced by the rising underemployment and underutilisation rates. So there is still spare capacity in the labour market, despite back-to-back rate cuts. The national unemployment rate needs to be closer to 4 per cent to lift wages growth and stir inflation, but has ticked up since February. And jobless rates are over 6 per cent in Queensland, Tasmania and South Australia.
• Population growth is easing a little – now below the decade average growth rate – with Victoria’s population boom passing. And Australia’s recent baby boom appears over. However, Western Australian and South Australian annual population growth rates are at 4-year highs – perhaps making it even more difficult to bring still-high unemployment rates down.
• Reflecting the domestic economic slowdown, annual passenger growth rate on the Sydney to Melbourne air route has softened to 7-year lows.
• Following today’s mixed labour market report, Commonwealth Bank Group economists now expect a rate cut in October and a follow-up reduction in February 2020.
published by Ryan Felsman, Senior Economist, CommSec