Latest figures from the ABS show there are now more employed Australians than ever before, but indicators suggest unemployment could be on the rise, with a smaller volume of job vacancies being advertised.
According to the ABS, the trend participation rate hit a new record high in May 2019.
“Australia’s participation in the labour force continues to rise, with the participation rate up [by] 0.4 [of a percentage point] over the past year to an all-time high of 65.9 per cent,” ABS chief economist Bruce Hockman said in a statement releasing the figures.
“The participation rate for people aged 15–64 also climbed to a record rate of 78.4 per cent, with a record 74.3 per cent of people in this age group employed.”
What does that mean for Australia’s economy?
While a higher participation rate — i.e. more people of working age in paid employment — may seem like a good thing at face value, it can be driven by people delaying their retirement and remaining in the workforce, often due to financial concerns or constraints.
It also has a direct impact on the nation’s official unemployment rate, as more people compete for jobs.
The ABS noted that the trend unemployment rate remained steady at 5.1 per cent for the third straight month in May, despite an extra 28,000 jobs being created.
Those new jobs were evenly split between full-time and part-time.
In seasonally adjusted terms, the unemployment rate was also steady, at 5.2 per cent.
Underemployment — those looking for more paid hours of work than they currently have — increased slightly to 8.5 per cent in trend terms, “returning to the same level as May 2018”.
Working hours on the up
The figures also reveal that Australians are working longer hours than they typically have.
Hours worked edged up by 0.2 of a percentage point in May and by 2.5 per cent over the past year, which the ABS noted is well above the 20-year average of 1.7 per cent year-on-year growth.
Unemployment falls in most populous states
Breaking the figures down across the states and territories, there has been a distinct concentration of job creation in those states with the largest populations.
“Over the year, unemployment rates fell in New South Wales, Victoria, Queensland and Western Australia, and increased in South Australia, Tasmania, the Northern Territory and the Australian Capital Territory,” Mr Hockman said.
Are things about to turn sour?
Earlier this month, the Reserve Bank cut interest rates for the first time in almost three years, in part on the back of concerns that unemployment is on the way up.
At 5.2 per cent, the seasonally adjusted measure of unemployment has risen as 2019 has progressed, having hit an eight-year low of 4.9 per cent in January and February.
Despite this level being historically low, underemployment of more than 8 per cent has been of concern to regulators, but more closely watched stats have been inflation and wages growth.
Inflation has remained stubbornly low, currently sitting at 1.3 per cent, according to the Reserve Bank — well below its target band of 2 to 3 per cent.
Meanwhile, wages growth, as measured by the ABS’s Wage Price Index, has remained below long-term averages at 2.3 per cent, and 0.5 of a percentage point in the March quarter.
Fewer jobs being advertised
The number of job vacancies also looks to be drying up. Just hours before the ABS released its latest figures on the labour market, jobs board Seek revealed its monthly employment report for June, which revealed a 6.5 per cent fall in the number of jobs being advertised compared with a year ago.
Despite the headline fall in the number of job ads, Seek’s Australian and New Zealand managing director, Kendra Banks, suggested this could be more of an irregularity, thanks to the federal election and also the impact of Easter falling so close to Anzac Day this year.
“It has been interesting to see that job ad volumes have moderated in May after a pronounced drop in April. We suspected that April advertising was heavily impacted by multiple public holidays and the lead-up to the federal election, and our data has verified this hypothesis,” Ms Banks said.
“While May job ad volumes are still down from 2018, it is important to note that 2018 was somewhat of an anomaly with the highest [job ad volumes] in the past decade. If we compare May 2019 to May 2017, we can see that this month had 3.0 per cent more jobs advertised.”
Ms Banks added that post-election, “it will be interesting to see which industry groups commit to new headcount”.
Interestingly, the average advertised salary increased by 3.4 per cent. At a media brief ahead of the report’s release, Ms Banks suggested this reflects a hollowing out in the job ads market, with vacancies increasingly being focused on low-value and high-value roles, while the middle dries up.
Over the past year, Seek said the volume job advertisements has fallen in every state and territory.
The Northern Territory led these falls, with job ads plummeting by 20.3 per cent year-on-year. The ACT also recorded double-digit percentage falls, down by 12.9 per cent.
Elsewhere, ad volumes were down by 9.9 per cent in NSW, 7.5 per cent in Victoria, 5.1 per cent in South Australia and 4.2 per cent in Queensland.
Tasmania and Western Australia recorded the smallest falls, easing by 1.1 per cent and 1.9 per cent, respectively.
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