The Australian sectors that have been hiring and firing over the past 12 months

Photo by Cameron Spencer/Getty Images

Australia’s labour market has been on a tear over the past 12 months with employment jumping by 319,000, an increase of nearly 3%.

However, while a stellar headline result, and one of the strongest outcomes seen in many years, that strength has not been uniform in nature as seen in this excellent chart from Justin Smirk, senior economist at Westpac.

Source: Westpac

It shows the net change in employment across individual sectors in the 12 months to August this year, breaking down the change by full and part-time employment.

It’s quite revealing, with much of the headline increase in employment concentrated in just a few sectors.

“In the last year growth in total employment accelerate to 2.75% year-on-year in August which is a very solid uptick,” says Smirk.

“However, this surge has been narrowly focused with the net balance of sectors expanding less sectors contracting only just positive at +1. The long run average net balance is +3.”

Of all those sectors monitored by the Australian Bureau of Statistics (ABS), the number where employment increased was only marginally higher than those where jobs were lost.

And, reinforcing the view that employment growth has been concentrated in just a few sectors, Smirk says that more than half of the gains have been in the household services sector, led by strong growth in education and health.

“By broad sector the largest gains in the last year have been in health care and social assistance, construction, education and training, accommodation and food services, retail trade, agriculture, forestry and fishing and transport postal and warehousing,” he says.

“The sectors shedding the most employees were professional scientific and technical, administrative and support services and finance and insurance.”

Outside of the split in employment change across individual sectors, the other interesting fact Smirk uncovered from the ABS data was that the total change in employment over the past six months was largely as a result of fewer staff being shed, rather than an acceleration in actual employment growth.

“Of the sectors that are expanding, the six month gain slowed to 364,900 in August from 863,4000 back in February,” he says.

“Overall, the net gains in the last six months have come via a reduction in employment losses in those sectors contracting, from 109,900 in the six months to February to 22,200 in the six month to August.”

This table from Smirk shows the change in employment levels by sector, comparing the level of hiring in the year to August 2016, the six months to February this year and that seen over the past six months.

Source: Westpac

“The pace of employment growth has slowed in the last six months and the reason net growth in total employment has remained positive is the offset from the moderation in employee shedding in those sectors that are contracting,” he says.

That’s an interesting trend, and one that will be watched closely in the period ahead.

Will a slowdown in firing be able to offset a continued deceleration in hiring, presuming the recent trend continues?

Markets will get further clarification on that front later this week with the ABS due to release Australia’s September jobs report on Thursday, October 19.

The median economist forecast is looking for an increase in employment of 15,000, leaving the unemployment rate steady at 5.6%.

Since February, employment has increased on average by 41,800 per month, largely reflecting strong growth in full-time employment over this period.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.