Flat unemployment rate and Part-time jobs on the rise for Australia



As per the latest labor force updates revealed by the Australian Bureau of Statistics, the monthly changes demonstrated rise in employment of 3,700 to 11,919,400 (0.03% growth rate) while unemployment dropped by 2,200 to 724,300 for May 2016. However, the unemployment rate was found to be maintained at 5.7%. There was a fall of 2.3 million hours in monthly hours worked in all jobs to 1,632.1 million hours (i.e., 0.1%). The seasonally adjusted estimates indicated monthly employment rise of 17,900 to 11,930,700 and full-time employment remaining steady at 8,156,500 and part-time employment rising 17,900 to 3,774,200. The participation rate, which shows the number of people who are either employed or seeking work actively declined to 64.8%.

The labour force underutilisation rate (includes both unemployment and underemployment) dropped by less than 0.1 pts while being maintained at 14.2% while the seasonally adjusted estimates indicated the labour force underutilisation rate rising by 0.1 pts to 14.2%. The trends also indicated rise in underemployment for males while underemployment for females continued with the downward trend in May.


Employed persons and Unemployment rate (Source: Australian Bureau of Statistics)

Overall, the monthly trend employment growth in Australia seems to ease a little last month. However, it has been reported that the monthly growth rate was below the monthly average over the past 20 years (0.15%). The May’s growth rate of 0.03% was in fact way below the peak of 0.26% in September 2015. In comparison to last year, the trend employment jumped by around 217,000 persons indicating an annual growth rate of 1.9% which is below 2.6% rate noted at December 2015.

One key aspect highlighted by the data is that trend part-time employment is witnessing continued growth while there are decreases in full-time employment. The part-time employment increase has been noticed for the eleventh consecutive month and fourth consecutive month with full-time employment decrease of more than 5,000 persons has been noted. This shift has been maintained in the recent months and an increase of about 43,000 in new jobs since April has been noted with creation of 70,000 part-time positions as opposed to loss of 27,000 full-time jobs. Further, economists suggest that jobs growth may be on the rise in industries such as tourism, hospitality and health care that employ casual labour as opposed to areas such as mining and manufacturing.

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From region standpoint, trend unemployment rate increased in Queensland (up 0.1 percentage point) while there were decreases in Australian Capital Territory (down 0.2 percentage points), Victoria, Western Australia, Tasmania and Northern Territory (all down 0.1 percentage point), and were relatively unchanged in New South Wales and South Australia. The figures also show that the jobless rate was the same in the face of tepid growth in employment because of the modest decline in the proportion of people already in work or looking for jobs.


Employment to population ratio (Source: Australian Bureau of Statistics

Overall, the result is slightly above market expectation. Experts believe that Australia should be creating about 20,000 jobs a month in order to maintain the unemployment rate. However, it now appears that due to the slow growth in population and the drop in participation, the current level of job growth may be enough. On the other hand, few believe the steady rate to be still indicative of ongoing weakness in the economy. One prominent economist said that though the latest data seems to be inconsistent in comparison to job growth, this can be explained by the considerable growth in part time jobs over the past year. However, experts are also seriously worried about the quality of the jobs being generated.  There has been no increase in full time employment over the last three months accompanied by the reduction in the average number of hours worked. This could suggest that the growth in consumption as well as GDP would probably slow down even if there is a continued growth in total employment. At the same time, the steady unemployment rate seems to partially offset the pressure related to further interest rate cut. Whether the pace of improvement is sufficient or not to deal with challenges such as economic growth and inflation at large, is yet to be ascertained.

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