Jodie Patron, Senior Economist, KPMG, comments on today’s unemployment figures
The headline of today’s ABS jobs figure is very positive – the lowest unemployment rate for a decade.
But there is a counter-balancing element in the detail: underemployment – where people are unable to work as many hours as they would like – has pushed upwards.
Broadly, the labour market continues to show strength across a range of key indicators. The official unemployment rate has fallen to 4.9 percent seasonally adjusted, the lowest since December 2010.
Just as important, the share of the population in a job (employment to population ratio) has continued to rise, now at 63.0 percent, the highest ever recorded (record go back to 1978). This is encouraging.
Equally positive is the nature of the employment – full-time jobs rose 51,600 while part-time jobs decreased 22,500, giving net growth of 29,100 jobs in the economy. The proportion of people working part-time fell (31.5 percent), a decrease of 0.2 percent from May.
The workforce participation rate was flat over the month. The female participation rate was down 0.1 percent but, importantly, is still hovering near recent highs, just 0.2 percent below the all-time high set in March this year.
Youth unemployment is particularly pleasing. Seasonally adjusted unemployment among those aged 15-24 has fallen to 10.2 percent. This is the lowest since December 2008.
Hours worked has been the most reliable indicator of the impact of lockdowns on the underlying labour market. Hours worked across Australia fell 1.8 percent in June, as a result of the lockdown imposed during the survey period in Melbourne – hours worked in Victoria fell by 8.4 percent.
Looking at the rest of Australia, hours worked increased 0.5 percent. The current lockdown in Sydney will be evident in next month’s figures.
The separate ABS Job Vacancies series showed a record number of vacancies in May – 362,000 – 57 percent higher than pre-COVID-19 levels. These vacancies are turning into growth in jobs in the month of June. Once we get past the latest COVID-19 induced lockdown, employment growth is likely to continue.
The debit side of today’s figures was in underemployment which deteriorated in June, rising to 7.9 percent from 7.4 percent, matching the fall in hours worked, capturing the same effect of the lockdown. Underemployment in Victoria rose by 2.3 percent to a new rate of 10.1 percent. All other states had similar or lower underemployment this month, with only the Northern Territory recording an increase. (0.5 percent) .
Victoria aside, the general pattern shows strong employment growth in Queensland (0.6 percent), Western Australia (0.9 percent) and Tasmania (1.0 percent). It may seem counter-intuitive, but the WA unemployment rate simultaneously rose by 0.5 percent – employment and unemployment rates can both rise if there is also a large lift in the workforce participation rate, which there was in WA of 0.9 percent.
South Australia showing the reverse of this, a fall in employment (-0.5 percent) but a drop in the unemployment rate (-0.5 percent) to 5.3 percent.
The Northern Territory is showing some persisting labour market weakness with a fall in employment (-3.9 percent), a rise in unemployment (0.3 percent), with total employment below March 2019 by 5,600 jobs and unemployment rate 1.2 percent higher than March 2019. The ACT has shown labour market strength since the beginning of the pandemic with employment now 5,400 jobs higher than March 2019. The unemployment rate jumped (1.3 percent) in June (4.9 percent) from May (3.6 percent).
Overall, underlying strength in the labour market persists. Provided the pandemic can be kept in check, the outlook for jobs is encouraging. The issue going forward is meeting the challenge of finding skilled workers to fill a record level of job vacancies.