UPDATED: ABS data for October reveals more in work but the rate of growth slowing.
Jobless rate edges up, hints of looser labour market
The unemployment rate edged up by 0.2 percentage points to 3.7 per cent in October, according to ABS data just released, despite the number in work rising by 55,000.
Head of labour statistics Bjorn Jarvis said the rate returned to its mid-year level and the employment growth rebounded from a small increase in the previous month.
“With employment increasing by 55,000 people and the number of unemployed people increasing by 28,000, the unemployment rate rose to 3.7 per cent in October. This was back to around where it had been in July and August,” he said.
“The large increase in employment in October followed a small increase in September of around 8,000 people.
“Looking over the past two months, these increases equate to average employment growth of around 31,000 people a month, which is slightly lower than the average growth of 35,000 people a month since October 2022."
Other key indicators included an employment-to-population of 64.5 per cent, an increase of 0.1, while the participation rate also rose two-tenths to 67.0 per cent.
BDO economics partner Anders Magnusson said all recent data – the low unemployment rate, record-high participation rate and yesterday’s wage growth result all indicated a tight labour market.
“The labour market appears to be defying gravity when viewed from a traditional perspective, with interest rates rising and the unemployment rate stuck to the floor,” he said.
“The latest figures show that Australia’s population grew by 560,000 in the last year, almost the size of Tasmania, driven by net overseas migration. Yet the employment-to-population ratio remains steady, proving the ability of the labour market to absorb this additional labour.
“However, this makes sense as migrants don’t just supply labour, but they also add a lot of demand to the economy, which creates jobs.
“Despite all of this, leading indicators show that the labour market is loosening, with a stable underemployment rate and rising underutilisation rate.”
The underemployment rate remained at 6.3 per cent in October, 0.4 percentage points higher than the same month last year but 2.4 percentage points lower than before the pandemic.
Meanwhile the ABS underutilisation rate, which combines the unemployment and underemployment rates, rose 0.1 percentage point to 10.0 per cent.
“This was 0.7 percentage points higher than last October, but 3.9 percentage points lower than March 2020,” the ABS said.
CreditorWatch chief economist Anneke Thompson agreed the job market was getting easier for employers.
“Total employment over the year has increased by 3.0 per cent, however the number of unemployed people has increased by 13.2 per cent, meaning the lack of available workers that has been a feature of the economy since the end of lockdowns is now starting to be less of a problem for employers,” she said. “The increase in unemployment, despite good gains in employment numbers, can be attributed to population growth, increasing the pool of available people of working age population.”
The ABS said monthly hours worked increased 0.5 per cent on a slowing annual growth rate of 1.7 per cent, down from around 5 per cent in the middle of the year.
Mr Jarvis said compared with the labour market just before the pandemic, the growth in hours worked was still greater than employment, at 10.0 per cent and 9.2 per cent, but the gap between the two had recently narrowed.
“The recent slowdown in the growth of hours worked may suggest that the labour market is starting to slow, following a particularly strong period of growth,” he said.
The CEO of recruitment consultant ASPL, Kris Grant, said some sectors were still seeing persistent skills shortages but there had been a slowdown in recruitment activity.
“In seasonally adjusted terms, internet job advertisements fell 3.8 per cent (or 10,400 job advertisements) in October,” he said. “Recruitment activity declined in four states and territories over the month, with Victoria notably recording the strongest decrease (down by 7.1 per cent or 4,900).”
“Eventually we expect the Australian economy to slow as a result of higher interest rates and with that, employment growth is likely to slow too, which is expected to push the unemployment rate above 4 per cent in 2024.”
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