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Thursday, 17 March 2016

Trend employment growth eases

Employment growth steady

The ABS released its all-important Labour Force figures this morning, so let's spin through a few charts in two short parts.

Part 1 - Employment growth eases

In seasonally adjusted terms employment increased by +300 in February, to be up by +11,400 in trend terms to a total employment figure of 11,903,100.



The composition of employment was slightly positive, with full time employment increasing by 15,900 and part time employment declining by 15,600.



After an apparently blistering year of job creation in 2015, trend annual employment growth has eased to around +271,500 or +2.3 per cent, which still compares very favourably to a population growth rate of only around +1.3 per cent. 


The seasonally adjusted unemployment rate of just 5.81 per cent was better than market expectations of around 6 per cent, with the participation rate down by 0.2 per cent to 64.9 per cent. The trend unemployment rate now sits at a 28 month low of 5.83 per cent. 



There will no doubt be plenty of focus on the shimmy down in the participation rate, although the ABS noted that the employment to population ratio has actually increased over the past year from 60.7 per cent to 61.3 per cent, while the unemployment rate has declined from 6.2 per cent to 5.8 per cent. 

Overall it's been a somewhat positive couple of years for the labour force, even if the unemployment rate is still rather too high and there does look to be a risk of a loss of momentum.

Part 2 - State versus state

The seasonally adjusted total employment figures by state show how jobs growth has been overwhelmingly focussed in the three most populous states of late. 



Over the past year more than 98 per cent of employment growth in trend terms has been accounted for by New South Wales (57 per cent), Queensland (24 per cent) and Victoria (17 per cent). 

Employment growth has deteriorated in Western Australia, while the southern states have been rather stagnant for some years now. 



Looking at total employment growth in cumulative terms, over the past four years Australia has seen employment growth of +611,600, driven almost exclusively by New South Wales (+262,000), Victoria (+193,000), Queensland (+102,000), and Western Australia (+51,000). 

Over the same timeline employment has been flat in Tasmania (+1,000) and has declined in South Australia (-2,500). 



Indeed the month of February did not prove to reveal a happy set of numbers for the southern states, with seasonally adjusted unemployment rates leaping in Tasmania (up +0.4 per cent to 7 per cent) and South Australia (up +0.9 per cent to 7.7 per cent).

At the other end of the spectrum there was a remarkable drop in Queensland's unemployment rate from 6.4 per cent to just 5.6 per cent.

Clearly there is more noise in these figures than at a delayed Madonna concert, and the trend figures tell a more sober tale, with the trend unemployment rates falling steadily in New South Wales and Queensland for 13 and 16 months respectively. 


The wrap

Overall, a fairly soft set of numbers, which may keep an interest rate cut in play but not imminent. 

Futures markets are pricing 100 per cent chance of an interest rate cut by November, perhaps in part because the Australian dollar has crept higher than desired at 76 US cents.