Lowest jobless rate in almost 48 years

Employment rose by 4,000 in April with full-time jobs up by 92,400 but part-time jobs were down by 88,400. Total employment hit a record high of 13.4 million in April.

To two-decimal places, the unemployment rate was 3.85 per cent in April, down from 3.93 per cent, the lowest level since the current monthly series began in February 1978. And looking back even further – when the labour force data was published quarterly – it is the lowest jobless rate since August 1974.

The participation rate eased from a record high of 66.4 per cent in March to 66.3 per cent in April. The employment to population ratio remained at a record high of 63.8 per cent.

Hours worked rose by 1.3 per cent in April to stand 2.8 per cent up on a year ago.

What does it mean?

• The job market continues to tighten. The jobless rate now stands at the lowest level in almost 48 years. A record proportion of Australians are employed. Hours worked continue to lift. And measures of labour utilisation such as under-employment (6.1 per cent) and under-utilisation (10 per cent) are at 13½-year lows.
• Some states are already arguably at ‘full employment’ with record lows for the jobless rate in NSW (3.5 per cent) and Tasmania (3.8 per cent) and amazingly at 13½-year lows of 2.9 per cent in Western Australia.
• The job market outcomes in April were choppy, but reflect influences such as NSW and Queensland floods and the number of people sidelined from the workforce with the Omicron virus and influenza. In April, hours worked rebounded by 2.5 per cent in NSW and 3.3 per cent in Queensland, respectively.
• Given the continued tightening of the job market, we expect the Reserve Bank to lift rates at the June 7 Board meeting by 25 basis points. Emergency-level lows for interest rates are clearly no longer required.
• So far, wages aren’t soaring in response to tight job market conditions – at least according to the official Wage Price Index. But the Reserve Bank notes from its business surveys that wages are lifting and are expected to rise at a faster rate in coming quarters. The private sector NAB business survey shows labour costs growing at a quarterly rate of 3 per cent.
• More and more businesses are bemoaning the lack of suitably-qualified candidates to fill job vacancies. So with the labour market tight as a drum, pushing up wages and prices, the first order of business for the new government will be to focus on measures to boost the supply of workers. This may include measures to lift migration of skilled workers, measures to reduce disincentives for people moving cities or regional areas to obtain jobs around the country and increasing incentives to encourage both internal and overseas in-bound migration.
• Commonwealth Bank (CBA) Group economists expect unemployment to fall further to around 3¾ per cent and then track broadly sideways through the remainder of 2022 and 2023. But further modest declines in the jobless rate can’t be ruled out. The assumption is that ‘full employment’ is consistent with a jobless rate near 3.5-4.0 per cent. However we won’t know for certain when the fabled ‘full employment’ level is achieved until after it has been attained. It is the jobless level that, once breached, is characterised by unsustainable increases in wages, causing inflation to hold above the 2-3 per cent target band.
• The ‘normalisation’ of interest rates will continue in line with the more ‘normal’ operation of the economy. CBA Group economists tip rate hikes, each by 25 basis points, in June, July, August and November in 2022 and then in February 2023. That would take the cash rate to 1.60 per cent – still historically low, despite an active rate hiking cycle.

• Employment rose by 4,000 in April with full-time jobs up by 92,400 but part-time jobs were down by 88,400. Total employment hit a record high of 13.4 million in March.
• The participation rate fell from a record high of 66.4 per cent in March to 66.3 per cent in April. The female participation rate eased from 62.3 per cent in March to 62.1 per cent in April. And the male participation rate fell from 70.8 per cent in March to 70.7 per cent in April.
• To two-decimal places, the unemployment rate was 3.85 per cent in April, down from 3.93 per cent in March, the lowest level since the current monthly series began in February 1978. And looking back even further – when the labour force data was published quarterly – it is the lowest jobless rate since August 1974.
• The unemployment rate for males fell by 0.2 percentage points to 4.0 per cent, its lowest level since October 2008. For females, it remained at 3.7 per cent for a second month, which is the lowest it has been since May 1974.
• The youth unemployment rate rose from a 13½-year low of 8.3 per cent in March to 8.8 per cent in April. Youth unemployment is still 2.8 percentage points below the pre-Covid level in March 2020.
• Hours worked rose by 1.3 per cent in April to 1,833 million hours, up 2.8 per cent on a year ago.
• The employment to population ratio was steady at a record high 63.8 per cent in April.
• The underutilisation rate fell from 10.3 per cent in March to a 13½-year low of 10.0 per cent in April. And the underemployment rate dipped from 6.3 per cent in March to a 13½-year low of 6.1 per cent in April.
• Unemployment across states/territories in April: NSW 3.5 per cent, a record low (March: 3.9 per cent); Victoria 4.2 per cent (4.0 per cent); Queensland 4.5 per cent (4.0 per cent); South Australia 4.5 per cent (4.9 per cent); Western Australia 2.9 per cent, a 13½-year low (3.4 per cent); Tasmania 3.8 per cent, equal record low (4.4 per cent); Northern Territory 4.1 per cent (4.0 per cent); ACT 3.1 per cent (3.4 per cent).
• Employment across states/territories in April: NSW +6,600; Victoria +11,600; Queensland -14,900; South Australia ‑5,000; Western Australia -1,800; Tasmania -1,200; Northern Territory +2,900; ACT -400.
• On Covid-19, the ABS noted “In line with rising numbers of COVID-19 cases in April, the number of people working reduced hours due to illness continued to be high, reflecting ongoing disruption associated with the Omicron variant.” 
• “Around 740,000 people worked reduced hours in April because of illness, almost double what we usually saw in April before the pandemic. Of these people, around 340,000 worked no hours, which was around triple what we would usually see.”

Originally published by CommSec