Labour Force Survey — September | By the numbers
- Employment increased by 5,600 in September, which was below the median market forecast for +15,000. August's initially reported gain of 44,000 was lifted a touch to 44,600
- The seasonally adjusted unemployment rate fell to 5.00% (market f/c was 5.3%) from the level in August at 5.27%
- Participation rate fell 0.24ppt to 65.44% (market f/c was for no change at 65.7%)
- Total hours worked in September lifted 0.4% to 1.757bn hours (+1.9%Y/Y)
- Underutilisation rate fell 0.2ppt to 13.3%, while the underemployment rate was steady at 8.3%
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Labour Force Survey — September | The details
On a compositional basis, the 5,600 addition to employment in September was split +20,300 to full-time and -14,700 to part-time. Employment growth remains solid at an annual pace of 2.27%, but it has been easing through 2018.
Consistent with the rise in employment and the decline in the unemployment rate, total hours worked lifted in September (+0.4%), with an annual increase of 1.9% to 1.757bn hours. Adjusting those figures for the change in participation, average hours worked per person lifted 0.3% in the month to 139.1 hours, although this is 0.4% below the level from a year ago (139.6 hours).
For the first time, the Australian Bureau of Statistics (ABS) published monthly estimates of underemployment (those employed but looking to work more hours) and underutilisation (combining the underemployed and unemployed). These figures were previously only available on a quarterly basis. In September, the ABS reported that the underutilisation rate fell 0.2ppt to 13.3%, while the underemployment rate remained at 8.5%.
The state-level unemployment rates were improved in September, with declines for; New South Wales (-0.25ppt to 4.39%), Victoria (-0.19ppt to 4.55%), Queensland (-0.34ppt to 5.98%), South Australia (-0.2ppt to 5.5%) and Western Australia (-0.37ppt to 6.03%). Tasmania was little changed (-0.02ppt to 5.77%).
However, outcomes were more varied in terms of employment creation in the month; New South Wales +2,800, Victoria +20,000, Queensland -11,600, South Australia -200, Western Australia +3,100 and Tasmania -1,400.
For Q3, Australia-wide employment lifted by 45,600, with this outcome dominated by Victoria +48,500 and New South Wales +19,500. A similar concentration is evident over the past 12-months, with national employment growth of +280,900, led by New South Wales +134,200 and Victoria +85,500. Clearly, a more balanced spread of employment growth would be desirable going forward.
Labour Force Survey — September | Insights
The overall tone of September's data was positive although, given that the decline in the headline unemployment rate occurred alongside a fall in participation, it remains to be seen whether that 5% rate can hold or be improved upon. Note that the ABS highlighted that 'sample rotation' played its part — the incoming group had lower unemployment and participation rates than the sample.
Given the month-to-month volatility, the Reserve Bank of Australia (RBA) will likely be focusing on the trend unemployment rate, which remains at 5.2% after revision. The RBA, on current forecasts, does not anticipate the unemployment rate declining sustainably to 5% until the end of 2020. Meanwhile, despite some improvement, labour force underutilisation remains elevated, which is reason to think that stronger wages growth is still some way off, particularly given the uneven nature of state employment growth.
