Australian Labour Force Survey - First Impressions
Written and accurate as at: May 18, 2017 Current Stats & Facts
The employment report surprised to the upside for a second consecutive month.
We interpret the results as volatility in an improving trend. The results bring the employment numbers more into line with the fundamentals and forward indicators, such as the Westpac Jobs Index.
Employment increased by 3.7.4k in April and by 97.4k over the past two months – no doubt an exaggeration of the underlying trend. Full-time fell 11.6k in the month, but that comes after +73.9k in March.
Over the past year, employment grew by 1.6%, in line with population growth. Full-time is up 1.0% over this period and part-time is up 3.0%.
The unemployment rate printed at 5.71% in April, moderating from 5.86% in March. The participation rate was steady at 64.8%, after rebounding over recent months.
Hours worked were disappointing in the month, down 0.26%, to be up 1.3% over the past year.
Employment over the past year: a story of two halves
The jobs results for the six months to April relative to the prior six months to October 2016 highlights the turnaround in reported labour market conditions. Employment increased by 1.4% in the six months to April, including a 1.2% rise in full-time and 1.7% gain in part-time. Over the six months to October 2016, employment grew by only 0.2%, weighed down by a 0.3% decline in full-time
The state by state detail is insightful. Victoria is the powerhouse, with jobs up 3.8%yr, including a 3.2% annualised pace over the six months to April. The state is performing well and population growth is strong. Sustaining jobs growth at this pace is unlikely.
NSW is the surprise, with scope for catch-up in our view given the strength of business conditions. Employment rose 0.6% over the past year, with the most recent six months only a little better at 0.8% annualised.
The recent turnaround in the labour market is largely centred on the mining states. WA employment rose 1.9% over the six months to April, reversing a 1.2% decline over the previous half year. Qld employment is 2.7% higher over the past six months, after a 1.3% fall over the previous six months. The rebound in Qld jobs brings the labour market more into line with actual business conditions.
Comment The labour market report, while volatile month to month, adds to the evidence that the Australian economy has rebounded from the soft spot evident in 2016, associated with the July Federal election.
The Q4 national accounts reported a strong broadly based rebound in activity, with GDP growth printing at 1.1% in the quarter. Private business surveys report above average and improved business conditions early in 2017, as well as a lift in business confidence. This is against the backdrop of improved global growth and a rebound in commodity prices. Consistent with this and given the waning of the mining investment downturn, it is notable that conditions in the mining states of WA and Qld have – on some measures – either stabilised or improved.
The employment growth over the past six months brings the official data more into line the Westpac Jobs index, which points to further solid gains in the months ahead.
Considerable labour market slack persists, which will continue to weigh on wage and consumer inflation. The positive is that a strengthening of jobs growth will provide some support to household incomes and in turn consumer spending. Looking further ahead, in 2018, we expect the labour market to cool – as home building activity turns down and as China slows and commodity prices retreat further.
Disclaimer
This material contains factual information only and is not intended to reflect any recommendation or financial adviceTo the extent that this material contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs, and because of this, you should, before acting on it, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. Certain types of transactions, including those involving futures, options and high yield securities give rise to substantial risk and are not suitable for all investors. We recommend that you seek your own independent legal or financial advice before proceeding with any investment decision. This material may contain material provided by third parties. While such material is published with the necessary permission none of Westpac or its related entities accepts any responsibility for the accuracy or completeness of any such material. Although we have made every effort to ensure the information is free from error, none of Westpac or its related entities warrants the accuracy, adequacy or completeness of the information, or otherwise endorses it in any way. Except where contrary to law, Westpac and its related entities intend by this notice to exclude liability for the information. The information is subject to change without notice and none of Westpac or its related entities is under any obligation to update the information or correct any inaccuracy which may become apparent at a later date. The information contained in this material does not constitute an offer, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter a legally binding contract. Past performance is not a reliable indicator of future performance. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.