Soft Jobs Data Keeps Rate Cuts On The Table

By Glenn Dyer | More Articles by Glenn Dyer

Nothing in yesterday’s August jobs data from the Australian Bureau of Statistics (ABS) that will cause a change of heart at the Reserve Bank except to confirm that the economy is running in very low gear with little chance of an improvement in weak wage growth in the next year and higher consumer spending.

The rise in the unemployment rate to 5.3% would be a small worry (it’s a year high) while the sluggish growth in full-time employment would also be a worry because it suggests there will be more weak household spending in coming months and for many retailers that will not be welcome news.

But new jobs were added and the participation rate rose which is at least a small sign of confidence among workers that they can look for and find a job fairly quickly.

The ABS said trend employment increased by around 22,000 people last month – around 700,000 full-time jobs were filled and around 15,000 part-time positions were also added.

That saw trend employment increased by 300,000 people in the year to August, a rise of 2,5% which is still well above the 2.0% long term rate over the last 20 or so years.

Full-time employment increased by 2.4% in the year and part-time employment rose 2.8%.

The trend monthly hours worked increased by 0.1% in August 2019 and by 1.7% which is in line with the 20-year average.

On a seasonally adjusted (and more volatile basis) new jobs 34,700 over the month, more than double the 15,000 level expected by the market but most of that came from part-time work (either existing employees being put on shorter hours or more new employees starting on a less than full-time basis).

That’s supported by the 15,500 fall in full-time employment last month (meaning nearly 50,000 new par time positions were filled.
The labour force participation rate rose to a record-high of 66.2%.

The AMP’s Chief Economist, Dr Shane Oliver wrote in a note yesterday afternoon that “Jobs growth was solid in August, but the quality of jobs growth was poor with full-time jobs going backwards and an ongoing rise in the participation rate pushed the unemployment rate to 5.3%, its highest since August last year.”

“(O)ur Jobs Leading Indicator continues to point to slower jobs growth ahead on the back of a slowing trend in jobs ads, job vacancies and hiring plans, so we still see a further slowdown in jobs growth over the next six months as the housing construction downturn flows through the economy.

“This is likely to see trend jobs growth fall well below the roughly 19,000 new jobs needed each month to absorb new entrants to the labour force. As a result, we continue to see unemployment drifting up to 5.5% by the end of the year.,” Dr Oliver wrote.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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