- Australia currently requires employment to increase by just over 20,000 per month to keep unemployment steady.
- It’s been below that level in each of the past two months, seeing unemployment lift to 5.6%.
- An unemployment level of 5% or lower is likely required to see wage growth start to accelerate.
If you’re a fan of cricket and economics — or just interested about when Australian wage growth will pick up — you’ll like the chart below from the National Australia Bank (NAB).
It shows the average increase in employment required every month in Australia to keep the nation’s unemployment rate steady.
Or, for the cricket fans among you, a jobs “run-rate required”.
Right now, the required rate stands at 20,000 per month, above the levels reported in each of the past two months, helping to explain the small uptick in Australia’s unemployment rate seen over this period.
As the NAB points out, on the back of strong population growth and more Australians reentering in the labour market, it’s meant that it’s been a tough slog to lower unemployment over the past year, and created headwinds for pushing up wage growth.
“Continuing strong growth in the working age population of 329,000, coupled with increased participation [which is up] nearly one percentage point over the past year, means that 383,000 jobs were needed to keep unemployment constant. Fortunately, with 421,000 jobs created, the number unemployed fell around 15,000 over the past twelve months,” says Ivan Colhoun, Chief Markets Economist at the NAB.
“The increase in participation and population mean that the spare capacity in the labour market is not being reduced as the RBA had hoped.
“A lot of jobs have been created, something the leading indicators suggest should continue, but it’s just that we aren’t creating sufficient jobs for the increasing population and those re-entering the workforce.
“The latter likely means that a broad-based increase in wages will be slower in emerging.”