Australia's jobs report beats on all fronts

Ryan Pierse/Getty ImagesSpectators perform a Mexican wave to celebrate.
  • Australia’s jobs report beat across the board in June.
  • Employment surged by over 50,000, led by strong hiring of full-time workers.
  • Without rounding, Australia’s unemployment rate fell to the lowest level since November 2012.

Australia’s jobs report beat across the board in June.

According to Australia’s Bureau of Statistics (ABS), employment jumped by 50,900 in seasonally adjusted terms, breezing past the median economist forecast that was looking for an increase of 16,500.

May’s increase in employment, previously reported at 12,000, was also revised higher to 13,500.

The split in hiring was just as impressive as the headline increase with full-time employment jumping by 41,200, continuing the pattern of reversing the move reported one month earlier.

Part-time employment also increased, lifting by 9,700 over the month.

By state and territory, employment jumped by 27,300 in New South Wales, the largest increase across the country. Employment in Queensland also lifted by 14,800, helping to offset a 6,600 decrease in Victoria.

As you would expect with the sharp increase in full-time employment, total hours worked increased by 10.7 million hours, or 0.6%, reversing a similarly-sized decline in May. Hours per employee also rose by 0.2% over the month.

Total employment now stands at 12.573 million, the highest level on record. Over the past year, full-time employment increased by 158,200, outpaced by a 180,800 lift in part-time employment.

Despite the surge in hiring, the unemployment rate held steady at 5.4%, courtesy of a sharp lift in labour force participation. Without rounding, the unemployment rate now stands at the lowest level since November 2012.

The labour force participation rate — measuring the percentage of working age Australians either in employment or looking for a job — jumped to 65.7%, up from 65.5% in May.

Economists had been expecting it to remain steady during the month.

Reflecting the sharp increase in the size of the labour force last month, and despite the sharp increase in employment, the total number of unemployed Australians only fell by 1,100 to 714,100.

The employment-to-population ratio — the percentage of working age Australians with a job — also increased by 0.2 percentage points to 62.1%, leaving it up 0.7 percentage points over the past year.

ABS

By state, New South Wales retained title of having the lowest unemployment rate in Australia at 4.7%, down 0.2 percentage points from May.

In contrast, Victoria’s unemployment rate jumped 0.5 percentage points to 5.6%, perhaps reflecting that its population is increasing faster than any state or territory.

Like New South Wales, unemployment fell in all of Australia’s remaining states, led by a steep 0.7 percentage drop in Tasmania to 5.8%. Queensland’s rate also fell sharply, dropping 0.3 percentage points to 5.9%.

While it comes with the disclaimer that the ABS seasonally adjusted data is notoriously volatile, there’s not much to dislike about the June report.

Indeed, on face value, it was strong across the board with employment lifting strongly — led by full-time employment — helping to boost total hours worked.

And while the unemployment rate held steady, that was only because strong labour market conditions are encouraging an increasing number of working age Australians to enter the labour force.

Employment has never been this high, with the proportion of Australians with a job sitting at levels rarely seen in several years.

That’s undoubtedly good news.

While a strong report, and indicative that labour market conditions continue to tighten, the one sticking point remains the still-elevated level of underutilised workers.

With unemployment and underemployment still comparatively high, it continues to weigh on wage pressures despite strong employment growth.

Until the level of underutilised workers declines, it’s unlikely that we will see any meaningful lift in wage pressures, continuing the pattern seen in recent years.

For the RBA, it will be undoubtedly pleased with today’s report. However, until it’s confident that tighter labour market conditions are helping to boost wages, and eventually inflation, it’s unlikely to see the need to begin lifting official interest rates.

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