The latest employment data released by the Australian Bureau of Statistics (ABS) reveals that the unemployment rate remained steady at 3.7 per cent in August, when adjusted for seasonal variations.
This report, presented by Bjorn Jarvis, the ABS head of labor statistics, sheds light on the dynamics of the Australian job market.
Jarvis noted that despite an increase of approximately 65,000 individuals in employment, coupled with a modest reduction of around 3,000 people in the number of unemployed, the overall unemployment rate remained at 3.7 percent for August. This robust surge in employment comes on the heels of a slight dip in July, which often coincides with the school holiday period. Analyzing the last two months, the average monthly employment growth has hovered around 32,000 individuals, mirroring the trend observed over the past year.
Additionally, the employment-to-population ratio saw a 0.1 percentage point uptick to reach 64.5 percent, closely approaching the record high observed in June. Furthermore, the participation rate climbed to a record high of 67.0 percent for August. These figures, in conjunction with the high employment-to-population ratio, continue to underscore the tight labor market conditions prevailing in Australia.
The data also indicates a nuanced pattern in employment and hours worked. While monthly hours worked experienced a modest decline of 0.5 percent in August 2023, employment recorded a 0.5 percent increase. Despite this minor dip in August, hours worked remained 3.7 percent higher than in August 2022, signaling faster growth than the 3.0 percent annual increase in employment. This suggests that the demand for labor is being met, in part, by individuals working longer hours.
Regarding underemployment and underutilization, the underemployment rate saw a 0.2 percentage point rise to 6.6 percent in August, marking a 0.6 percentage point increase compared to August 2022. Nevertheless, it is important to note that this rate remains approximately 2.2 percentage points lower than pre-pandemic levels. The underutilization rate, a comprehensive measure that combines unemployment and underemployment rates, inched up by 0.1 percentage point to reach 10.2 percent. This figure was 0.8 percentage points higher compared to the same period last year but notably lower, by 3.7 percentage points, than the March 2020 pre-pandemic levels.
In the realm of underlying trend data, the trend unemployment rate held steady at 3.7 percent, aligning with the revised July figure. In trend terms, employment saw growth of approximately 28,000 individuals (0.2 percent), while hours worked increased by 0.2 percent in August. Over the past year, employment has seen a 2.9 percent rise, accompanied by a 4.6 percent increase in hours worked. The employment-to-population ratio remained near its historical high of 64.5 percent for the fifth consecutive month, mirroring the updated figure for July. The participation rate exhibited a marginal uptick of less than 0.1 percentage point, reaching a record high of 67.0 percent.
Conversely, the underemployment rate within the trend data witnessed a marginal increase of less than 0.1 percentage point, reaching 6.5 percent, marking its highest level in 18 months.
CreditorWatch’s Chief Economist, Anneke Thompson said: “While the August 2023 unemployment rate remained steady at 3.7% on a seasonally adjusted basis, there was a strong gain in employed people overall, at 64,900, or a 0.5 percentage point increase. The very minor increase in the participation rate from 66.9% to 67.0% was the reason this jobs growth wasn’t enough to lower the unemployment rate again. While this is good news for the economy overall, coupled with still very subdued consumer confidence, it is unlikely to be enough to warrant an increase to the cash rate after the October meeting.
“Underemployment continued to rise in August, from 6.4% in July to 6.6%, meaning a larger proportion of workers are looking for more hours. And despite the surge in employment over August, monthly hours worked in all jobs actually declined by nine million hours, or 0.5% on a monthly basis.
While overall this is positive news for the Australian economy, our August Business Risk Index data tells us that business activity, particularly among small businesses, continues to slow down. The average value of B2B invoices is down over 30% year-on-year, and has been trending down for over a year now. We expect that hours worked and underemployment will continue to rise in line with current trends.”
Source
Labour Force, Australia, August 2023
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