Unemployment in detail: Broad deterioration

As summarised earlier, the Australian Bureau of Statistics (ABS) today released its labour force report for January, which registered a 13,500 increase in total employment but a sharp increase in the headline unemployment rate (from 5.1% to 5.3%).

In trend terms, the unemployment rate remained steady at 5.1%:

Again, total employment rose by a seasonally adjusted 13,500 to 12,995,400. Full-time jobs surged by 46,200, whereas part-time employment fell by 32,700:

The participation rate rose by 0.1% to 66.1%:

Trend jobs growth continues to fall:

The trend annual growth rate is 2.0%, with full-time employment at 1.7% and part-time employment growth at 2.8%:

The proportion of the population in full-time work is at all-time lows:

In January, the major eastern states easily led jobs growth over the past year in seasonally-adjusted terms:

The state seasonally-adjusted figures are notoriously volatile and subject to a big margin of error. As such, the below chart tracks state jobs growth in trend terms. Again, the major Eastern states have driven the jobs growth:

QLD and TAS have the highest seasonally adjusted unemployment and NSW and VIC the lowest:

The below chart shows the ABS’ more reliable trend unemployment rates, which shows NSW and VIC with the lowest unemployment and QLD and SA with the highest:

The aggregate number of hours worked fell 0.45% in January, with total hours worked rising just 0.9% over the past year – well below population growth (1.5%):

The below chart, which tracks the annual change in hours worked on a trend basis, paints a mixed picture, with differing growth across jurisdictions and just 1.3% growth recorded nationally:

Average hours worked has faded and is hovering at the lowest level on record:

Workforce participation is still tracking around all-time highs in trend terms, but has begun to fade:

The next chart summarises the annual change in the key employment aggregates on a seasonally-adjusted basis, which shows a softening labour market:

Finally, the ABS’ underemployment and labour underutilisation rates show a trend deterioration over the past year:

Given the strong correlation between underemployment and wages, this suggests that wage growth will soften even further:

With the economic fallout from the coronavirus expected to be immense, alongside the collapse in dwelling construction and the weakness in discretionary consumer spending, the labour market is destined to soften materially in 2020.

Leith van Onselen

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