Unemployment eases to 5.6 per cent, but full-time jobs lost

Updated

Australia's unemployment rate has fallen to 5.6 per cent with the creation of nearly 28,000 jobs in July.

Key points: Unemployment falls to 5.6pc in July after June figure revised up to 5.7pc

27,900 jobs were added to the economy last month: an increase of 48,200 in part-time, a fall of 20,300 full-time jobs

The proportion of the population in employment is the highest since April 2013

The Bureau of Statistics (ABS) revised up June's unemployment figure to 5.7 per cent, but the more stable trend figures, preferred by the ABS, remained steady at 5.6 per cent.

The participation rate rose slightly to 65.1 per cent, meaning more people were in work or looking for it, but the job creation last month was all part-time, with 20,300 full-time positions lost.

That translated to a 0.8 per cent fall in total hours worked last month.

However, Bureau of Statistics chief economist Bruce Hockman said the more stable trend figures for full-time employment rose for the 10th straight month.

"Full-time employment has now increased by around 220,000 persons since September 2016, and makes up the majority of the 250,000 person increase in employment over the period," he noted in the report.

TD Securities chief Asia-Pacific strategist Annette Beacher said the trend towards full-time jobs (up to the latest sector data from May) had been concentrated in some boom industries.

"The acceleration in full-time jobs has been skewed towards professionals, construction and health, while part-time jobs tend to be skewed towards retail and health," she noted.

The ABS said a 2.2 per cent rise in trend employment over the past year is above the average over the past two decades of 1.9 per cent, pointing to a reasonably health labour market.

Employment growth was also stronger than working-age population growth (1.6 per cent) which saw the employment-to-population ratio rise to 61.4 per cent — the highest it has been since April 2013.

Wages remain stagnant

While employment is still rising, and unemployment steady, Citi's economics team said that is not feeding through to higher wage rises.

Separate ABS data released today showed average weekly wages grew just 1.6 per cent — below the rate of inflation at 1.9 per cent.

"After inflation, this data implies negative real wages growth and so supports the view of ongoing below trend household consumption growth," the analysts wrote.

Yesterday's ABS wage price index for the June quarter showed typically pay packets rising 1.9 per cent over the past year.

Although economists say pay packets may get a one-off boost from a more-generous-than-expected minimum wage increase awarded by the Fair Work Commission in June.

Tasmania leads jobs growth

The ABS said Tasmania (4 per cent), Victoria (3.1 per cent) and Queensland (2.7 per cent) had the strongest employment growth over the past year.

However, Ms Beacher said the five largest states have all added full-time jobs every month over the first half of the year, in trend terms.

"NSW is leading the way, WA appears to be declining while SA (albeit on a smaller scale) is progressively adding more jobs each month," she observed.

Topics: unemployment, work, economic-trends, money-and-monetary-policy, business-economics-and-finance, australia

First posted