Unemployment remains steady at 5.2pc despite an extra 42,300 jobs

Updated

Australia's unemployment rate remained stuck at 5.2 per cent last month, despite the creation of 42,300 jobs in May.

Key points: A record number of Australians are in work or looking for it, with participation at 66 per cent

The unemployment rate remained steady at 5.2 per cent, but hours worked fell

Seek data show job ads in May were 6.5 per cent lower than a year earlier, foreshadowing weaker employment growth ahead

The Bureau of Statistics figures show part-time employment increased by 39,800, while full-time employment only rose by 2,400.

The increase in jobs failed to reduce the unemployment rate because a record 66 per cent of adults were either in jobs or looking for work last month.

Commonwealth Bank economist Belinda Allen said there were a few factors causing more people to look for work.

"More people are looking for work, the reasons why are likely driven by a number of factors; weaker household income growth, housing affordability and low return on investments for older workers," she wrote in a note on the data.

However, economists said the jobs growth and stable unemployment rate are masking the true level of weakness in the economy.

The ABS reported that monthly hours worked in all jobs decreased by 5.9 million to 1,775 million hours.

"The vast majority of jobs created were part time, and as a result the underemployment rate ticked up again, to 8.6 per cent," said Sarah Hunter, the chief economist at BIS Oxford Economics.

"But, on a trend basis, growth in full-time employment remains robust — the economy has added 266,000 full-time jobs over the last 12 months."

Election provides jobs boost

Economists also noted the federal election might have temporarily boosted employment, with tens of thousands of people hired to assist with polling booths and counting.

"The data covered the election period and that may account for the skew to part-time workers," CommSec chief economist Craig James said.

"Clearly there are temporary jobs created each three years for election-related roles."

Ms Allen said this effect was likely to be small, based on past experience.

"The Australian Electoral Commission has noted about 80,000 temporary workers were hired for the election," she wrote in a note on the data.

"But most of these are probably already employed based on previous commentary from the ABS. Typically the ABS says there is limited impact."

However, AMP Capital senior economist Diana Mousina disagrees, noting the election period coincided with the reference week for the ABS labour force survey.

"We estimate that the election boosted jobs by around 20,000-30,000 this time around so, if we exclude this temporary employment, jobs growth looks weaker in May," she said.

Job ads decline warns of future employment weakness

A fall in the number of job advertisements indicates that employment growth is likely to keep slowing over coming months.

Employment website Seek estimates that it accounts for about a third of job placements in Australia through ads on its website.

The number of those ads declined by 6.5 per cent in May 2019 compared to the same month a year earlier.

However, Seek's managing director for Australia and New Zealand, Kendra Banks, said the fall was coming from a record year for job ads in 2018.

"While May job ad volumes are still down from 2018, it is important to note that 2018 was somewhat of an anomaly, with the highest [job ad volumes] in the past decade," she noted.

"If we compare May 2019 to May 2017, we can see that this month had 3.0 per cent more jobs advertised."

The main sectors holding up the employment market, according to Seek's figures, were education, health care, farming and conservation, mining and energy, plus sports and recreation, all of which posted solid increases in ads over the past year.

On the flip side, property-related industries — design and architecture, construction, plus real estate and property — all saw job ads decline by about 20 per cent or more.

However, declining job ads are broad-based across the economy, with 22 out of 28 industry sectors reporting a fall in advertised vacancies over the past year.

Banking and financial services, engineering, trades and services, sales, manufacturing and transport logistics, admin and office support, advertising and media, as well as call centre and customer services, all had double-digit declines in job ads over the past year.

Tale of two territories: NT nation's weakest, ACT strongest

By region, the Northern Territory had the biggest fall in ads (-20.3 per cent), followed by New South Wales (-9.9 per cent) and Victoria (-7.5 per cent).

The ACT was the only state or territory that reported an increase in advertised vacancies (+12.9 per cent).

However, that increase in available jobs has not translated to higher salaries, with salaries for advertised jobs in the ACT up just 0.3 per cent over the past year, the lowest in the nation.

Advertised wage increases were highest in Tasmania, at 5.8 per cent, although it remained the lowest-paid state with an average advertised salary of $78,324.

New South Wales continued to have the highest paid workers, with average advertised salaries of $89,870, followed closely by the ACT.

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

First posted