The number of people employed reached a record high in March: CommSec's Craig James
EXPERT INSIGHT
The good news is that the job market recovery continues – and continues quite spectacularly. More jobs were created in the past six months than any similar period on record. Looking at March alone, the labour market results are truly awesome except for the drop in full-time positions – and that was a payback from the outsized gain in February. Unfortunately however, Aussies will remain sceptical on the speed and scale of the recovery for at least one more month – when the first month of post-JobKeeper data is published.
But it is a case of so far, so good. More people are looking for work, more people are finding work and the jobless rate continues its progress to pre-COVID levels. And while significant spare capacity remains, there were good gains made in the latest month on the measures of hours worked, labour under-employment and under-utilisation.
Looking ahead, there is indeed the uncertainty about what is the ‘true’ state of the job market after JobKeeper. But reassuringly, all measures of labour demand including job ads/vacancies show that there are plenty of businesses looking for staff. In fact, SEEK has today reported the highest number of monthly job ads in its 23+ year history.
There are plenty of jobs to be had, but will Aussies fill the available positions? That is the key issue for policymakers, and ultimately the economy. Ultimately if Aussies won’t take up the jobs on offer, then more specific attempts must be made to bring in foreign workers. Otherwise, economic momentum will be constrained.
The Reserve Bank is expected to stick to its script for now, vowing not to lift cash rates until 2024. That determination to maintain steady rates has been reinforced today showing the consumer inflation expectations fell from 4.1 per cent to 3.2 per cent in April. But clearly plenty of water will flow under the bridge before 2024.
What do you need to know?
Employment rose by 70,700 in March (consensus: +35,000) after increasing by 88,700 jobs in February. Full-time jobs fell by 20,800 and part-time jobs rose by 91,500 positions. The number of people employed rose to a record high of 13.078 million.
The unemployment rate fell from 5.8 per cent to a 12-month low of 5.6 per cent in March (consensus: 5.7 per cent).
Hours worked rose from 1,762 million hours to a record high of 1,800 million hours (up 2.2 per cent) to be up 1.2 per cent over the year.
Participation rate: The participation rate rose from 66.1 per cent to a record high of 66.3 per cent in March (consensus: 66.1 per cent).
Spare capacity: In March, the underutilisation rate fell from 14.3 per cent to a 15-month low of 13.5 per cent. The underemployment rate fell from 8.5 per cent to 7.9 per cent – a 7-year low.
Unemployment across states in March: NSW 5.4 per cent (February: 5.6 per cent); Victoria 6.1 per cent (5.6 per cent); Queensland 5.9 per cent (6.1 per cent); South Australia 6.3 per cent (6.8 per cent); Western Australia 4.8 per cent (6.0 per cent); Tasmania 5.9 per cent (5.7 per cent); Northern Territory 5.6 per cent (4.9 per cent); ACT 3.4 per cent (4.1 per cent).
Employment across states in March: NSW (+14,700); Victoria (+6,100), Queensland (+23,300), South Australia (-600), Tasmania (+400), the ACT (-2,700), Western Australia (+32,600) and the Northern Territory (-1,600).
What are the implications for investors?
One year on from the COVID lockdown and more Aussies are in jobs than ever before. Collectively Aussies are also working more hours than ever before. And the proportion of females employed has never been higher. We need to remember than when the jobless rate lifted to 7.5 per cent in May 2020, some economists were tipping that it would ultimately peak in excess of 16 per cent.
The economy has out-performed the ‘official’ forecasts from Federal Treasury and the Reserve Bank. If this out-performance remains significant then monetary and fiscal stimulus measures will need to be re-assessed. But that point is still some way off. Foreign borders remain closed, the vaccine roll-out is still slow and less than a month has passed since JobKeeper ended.
The record lift in jobs, together with the strengthening of job security will underpin consumer spending in coming months. And the desire to engage in retail therapy will be underpinned by the likelihood that the foreign border will be closed until much later in the year.
The improvement in the Western Australian job market is clearly a stand-out. The state led the nation in job creation in March and the jobless rate is the lowest for over seven years (since December 2013) – assisted in part by low population growth. The housing market will clearly be a key driver of the economy in 2021, courtesy of Building Bonus Grant and the HomeBuilder grant. In addition, the mining sector continues to be supported by solid demand and high commodity prices. Jobs growth in Queensland occurred following the announcement of the $200 travel voucher scheme, while interstate migration continues to support economic activity in the Sunshine State.
