Australia’s January jobs report has just been released, and it’s topped expectations yet again.
But beneath the surface the news was not that great.
According to the ABS, employment rose by 13,500 in seasonally adjusted terms, beating expectations for a gain of 10,000. December’s increase, previously reported as a gain of 13,500, was revised higher to a rise of 16,300.
Australian employment now stands just a whisker below 12 million, coming in at 11,998,200 for the month. It has grown by 0.9%, or 103,400 workers, in the past year. Full-time employment now stands at 8,125,700 with part-time employment at 3,872,500.
However, all of the jobs growth last month came from part-time employment, which surged by 58,300, offsetting a sharp decline in full-time workers, which tumbled by 44,800. By gender, female employment rose by 18,600, helping to offset a drop of 5,100 among males.
Over the past 12 months, part-time employment grew by 159,400, or 4.3%. At the other end of the spectrum, full-time employment fell by 56,000, or 0.7%. By gender, female employment grew by 82,100, or 1.5%. That far outpaced employment growth in males which increased by just 2,100, or 0.3%.
It’s worthwhile remembering that part time employment captures those who work up to 35 hours per week.
Despite the drop in full-time employment, the ABS said that total hours worked rose by 10.2 million hours to 1.6827 billion hours.
Over the past year, hours worked increased by 1.2%. Full-time hours worked grew by 0.4%, outpaced by a 5.1% lift in part-time hours.
The unemployment rate fell to 5.7% from 5.8% in December, courtesy of a drop in labour market participation to 64.6%. Participation previously stood at 64.7% in December.
Australia’s total labour force — including those in work and those seeking work — fell to 12,718,500. Over the past year it’s increased by 0.5%, or 65,400, well below the increase in Australia’s total population.
The male unemployment rate fell to 5.5% — the lowest level since February 2013 — while female unemployment held steady at 5.8%.
Helping to explain the drop in male unemployment, labour market participation among men fell to 70%, the lowest level on record. Female labour market participation rose to 59.3%, the highest level seen since July last year.
As a result of lower labour market participation, total unemployment fell by 19,300 to 720,020 persons.
By state and territory, the ABS said the largest increases in employment were in Western Australia (15,100 persons) and Queensland (8,500), helping to offset falls of 13,800 and 9,800 in New South Wales and Victoria.
This is an anomaly of sorts given these states are widely regarded to have the strongest economic conditions in the country.
Here’s the movement in the unemployment in each state and territory in January. The ABS does not offer seasonally adjusted estimates for the ACT and Northern Territory due to their small population size.
So what to make of the report? The initial response is disappointing, rather than disastrous.
Employment increased again, and has now increased for four consecutive months. It has also beaten expectation in each of the past three months.
And unemployment also declined, moving lower after spiking previously in December.
However, the internals of the report are not all that pleasing.
Full time employment tanked, continuing to underperform compared to part time hiring, while growth in total hours worked remains weak, largely due to the split in hiring that’s been seen over the past year.
And while employment has been growing, helping to reduce the unemployment rate, weak labour market participation — particularly among males — has contributed to the recent decline in unemployment levels.
That all fits with a labour market that has a lot of excess capacity that’s not currently being utilised, contributing to weak wage pressures in the economy.
So despite the headline figures, it’s not all great news.
However, given recent strength in alternative labour market indicators, there’s reason to believe that labour market conditions will strengthen in the months ahead, with many independent gauges hitting multi-year highs in recent weeks.
After the disappointing January report, attention will now turn to the release of the ABS’s December quarter wage price index on Wednesday next week.
In the September quarter last year, wages grew at the slowest pace on record. In light of today’s report, there’s little indication that a strong pickup in wage growth will be reported.
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