The 2016 boom in the Australian jobs market is now fading as 2018 moves into the June quarter, according to figures issued on Thursday by the Australian Bureau of Statistics.
Forget all the talk from the Federal Government about a million new jobs – that will happen sometime this year, even at the slowing rate of growth in seasonally adjusted data (it will take a bit longer in the more accurate trend series).
But there is now growing evidence that the surge in new job creation we saw for most of 2017 is fading.
That’s despite jobs vacancies remaining close to if not at all time highs. The monthly job ads series from the ANZ has shown a sharp slowing from the big 6.2% rise in January. There was in fact no growth in February and March job ads.
In short the rapid job pace of job creation seen early to mid 2017 is disappearing and this has implications for the strength of the expected rise in wages that the Federal Government and the Reserve Bank are forecasting for 2018 and 2019.
Next month’s Federal Budget for 2018-19 will be based on that expected improvement and while forecasts agree, the National Australia Bank’s March quarter business survey warns there’s a chance those hopes might be dashed.
Chief economist, Alan Oster wrote (https://business.nab.com.au/nab-quarterly-business-survey-march-quarter-2018-29410/)”… The Survey results suggest that conditions are in place for this to occur – employers are increasingly having difficulties finding suitable labour and while past experience suggests that wages can take a while to respond, in-time you would expect a response” Mr Oster said.
“The Survey also provides a warning that wages growth might have shifted down to a lower level; so while we expect to see some improvement in the future, wages growth at the levels seen pre-GFC seem a long way of,” he added.
Figures released yesterday in the monthly Labour Force report from to the Australian Bureau of Statistics – both on a trend and seasonally adjusted basis confirm the rate of new job growth has slowed noticeably since late 2017.
But perhaps the most noticeably figure was the revision of the February rise of 18,000 rise in the number in seasonally adjusted jobs, to a loss of 6,300 in the March figures from the Bureau. (http://www.abs.gov.au/ausstats/abs@.nsf/latestProducts/6202.0Media%20Release1Mar%202018?OpenDocument).
That is a significant restatement by the Bureau – it is a turnaround of more than 24,000 jobs in fact and underlines the sudden weakening in the health of the labour market in the past month or two (as the lack of growth in job adds are suggesting).
The trend data (which the ABS now emphasises) support the idea of the slowdown/ There has been a small rise in the unemployment rate since December (perhaps brought about by more people looking for work). The jobless rate has risen from 5.4% at the end of December to 5.6% in March.
Offsetting this though, the participation rate hit an all time high of 65.7%, up from 65.5% in December – a positive sign, with the increase due to a rise in the number of jobs being filled by women. The Bureau said the March figure was the highest since the current Labour Force series started in 1978. But that is a lagging indicator in the Labour Force series, along with hours worked which again rose in March.
In monthly terms, trend employment increased by 14,000 in March. This represents an increase of 0.11%, which was below the monthly average growth rate over the past 20 years of 0.16%, and the lowest monthly growth rate observed since December 2016 when the labour market was emerging from its slump that year)
The 14,000 new jobs continued a trend from late in 2017 – December that year saw 25,000 new trend jobs, January, 23,000, February 18,000 and now March 14,000. The trend is your friend, as Americans investors on Wall Street say and the ABS data and commentary confirmed the slowdown. The ABS said that in the year to March, trend employment increased by 376,100 persons (or 3.1 per cent). While that is above the average annual growth rate over the past 20 years of 1.9%, it is down from 3.3% in 2017 and 393,000 jobs all up were created. The Government uses the seasonally adjusted figure of 403,000 new jobs to boast about its achievements, but that has now fallen to 367,100 new full and part time jobs.
Trend full time jobs have fallen from 16,600 last December to just 1,000 in March. Trend part time work has risen from 8,800 new jobs in December 10 13,000 last month. That is a slowing in the growth rate, not a downturn. Watch for any further revision in the February figure and for changes in the March figures when the April jobs data is released in around a month’s time (after the budget).
