Australia’s unemployment rate falls to four-year low of 5.5%
Australia’s unemployment rate has fallen to a four-year low, with the labour market recording 12 straight months of employment gains – its longest stretch since 1994.
Figures show the unemployment rate fell to 5.5% in September, its lowest rate since March 2013, as the government’s National Disability Insurance Scheme contributes to a surge in health jobs and Western Australia continues to recover from the downturn in mining construction, adding 48,000 jobs over the last year.
Some economists say the Reserve Bank may have to lift rates in early 2018, such is the expectation for jobs growth.
HSBC chief economist Paul Bloxham
said businesses were reporting
a sharp jump in their concerns about being able to find “suitable labour”, which is a sign that the labour market is tightening and wages may finally start facing modest upward pressure over the next 12 months.
“With an improving labour market, inflation past its trough and growth expected to pick up, we see a cash rate hike in early 2018,” he said.
Bureau of Statistics figures show the unemployment rate declined to 5.5% in September, from 5.6% in August, in seasonally adjusted terms.
However, the ABS is putting special emphasis on the “trend” figures this month, because the trend figures smooth the more volatile seasonally adjusted estimates and provide the best measure of the underlying behaviour of the labour market.
Trend figures show the unemployment rate fell to a four-year low last month, with full-time positions jumping by 16,000 people and part-time positions rising by 8,000 people.
Over the past year, trend employment has increased by 2.8%, which is above the average year-on-year growth over the past 20 years (1.9%). The states with the strongest annual growth in trend employment over the last year are Queensland (4.1%), Tasmania (3.9%), Victoria (3.1%) and Western Australia (2.9%).
“The trend unemployment rate had been hovering in the range of 5.6% to 5.8% for almost two years but has now dropped to a four-year low of 5.5%,” Bruce Hockman, the chief economist for the ABS, said on Thursday.
“Full-time employment has now
increased by around 271,000 persons since September 2016 and makes up the majority of the 335,000-person net increase in employment over the period.”
Economists say the seasonally adjusted figures, despite being more volatile than trend figures, also show unemployment has fallen to a new cycle low, with the unemployment rate slipping to 5.5% in September, down from 5.6%.
Full-time employment rose by 6,100 last month, in seasonally adjusted terms, while part-time employment grew by 13,700.
“We expect to see at least another 250,000 jobs added over the coming year,” CBA senior economist Michael Workman said. “The unemployment rate, now at 5.5%, is forecast to move closer to the 5% level.”
The employment minister, Michaelia Cash, welcomed the employment figures, saying they proved the Coalition’s policies were pro-growth.
“Since the government came to office in September 2013, 825,500 jobs have been created – an average of over 200,000 new jobs each year”, she said. “While ABS labour force figures can jump around from month to month, this is the 12th consecutive month where there has been an increase in jobs”.
But the shadow employment minister, Brendan O’Connor, said the ABS figures also showed there were persistent underlying challenges in the labour market, including underemployment and low wages growth.
“While Labor welcomes the overall increase in jobs for the month of September, we note that there are 711,500 unemployed Australians, with 20,300 more people lining the unemployment queue than when the government was elected,” he said.
Economists said big services sectors such as health, education, retail, accommodation/tourism and transport had added nearly 400,000 new jobs over the past year.
“Given the trends in household and government spending, the health sector is set to continue expanding, towards about 15% of the workforce in the next few years,” Workman said.
“The federal government’s NDIS is forecast to add a total of 160,000 full-time equivalent jobs to the workforce over the next few years. We believe that it is already having a significant impact on health sector jobs.”