Labour Force Survey — January | By the numbers
- Total employment increased by 39,100 in January, more than twice the market forecast for +15,000. December's increase was revised down to +16,900 from +21,600
- The unemployment rate remained at 5.0%, in line with expectations
- Measures of spare capacity lowered in January; underutilisation rate by -0.1ppt to 13.2% (prior: 13.3%), and the underemployment rate by -0.2ppt to 8.1% (prior: 8.3% revised from 8.4%)
- The participation rate increased by 0.1ppt to 65.7%, ahead of expectations for no change from 65.6%
- Hours worked increased by 0.4% in January to 1.766bn hours to be 3.2% higher on a 12-month basis (prior: +0.1%m/m, +1.5%Y/Y)
Labour Force Survey — January | The details
The granular detail from today's release showed that the size of the labour force increased by a strong 45,700 in January. With employment up by 39,100 in the month, that meant a slight lift of 6,600 in the number of unemployed. Consequently, the nation's unemployment rate at two decimal places is now 5.01%, compared to 4.98% in December. The ABS reports only at 1 decimal place, so for all intents and purposes, the nation's unemployment rate was steady in the month at 5.0%.
However, both the underemployment (employed but wanting more hours) and underutilisation rates (underemployed plus unemployed) eased slightly to 8.1% and 13.2% respectively. The underemployment rate moved to its lowest since March 2015, while the underutilisation rate improved to a 5-year low. Yesterday's Wage Price Index data indicated these levels were still elevated.
On a compositional basis, full-time employment increased by 65,400 in January and part-time contracted by 26,300. Note that last month the split was full-time -9,500 and part-time +26,400. It is not unusual to see this sort of volatility from month to month. More importantly, the overall pace of employment growth remained robust at around 2.2% on a 12-month basis and remains in front of growth in the working-age population (around 1.6%Y/Y). For the record, full-time employment growth in annual terms to January increased to +2.8% from +1.9%, while part-time slowed to +0.9% from +2.7%.
Hours worked lifted 0.4% higher in the month, with a base effect seeing annual growth jumping to +3.2% from +1.5%. Adjusting for the increase in employment, the average number of hours worked per employee in January was 138.5, little changed from the previous month (+0.1%) but up by 1% compared to a year earlier.
The state detail showed another fall in New South Wales' unemployment rate, down by 0.4ppt to a record-low 3.9%. The news was not so good elsewhere, with rises for Victoria (+0.4ppt to 4.5%), South Australia (+0.4ppt to 6.3%), Western Australia (+0.4ppt to 6.8%) and Tasmania (+1ppt to 7.0%). Queensland's unemployment rate lowered from 6.1% to 6.0%.
Fitting with these trends, though the national increase in employment was strong in January at 39,100, that reflected a 47,200 increase in New South Wales. For the other states, Victoria added 2,200 jobs, but Queensland (-19,900) and South Australia (-4,500) fell, while Western Australia (+800) and Tasmania (+200) were broadly flat.
Labour Force Survey — January | Insights
In isolation, this was a strong update given that net employment blitzed the median forecast, while the measures of excess capacity in underutilisation and underemployment eased to multi-year lows, though still have scope for improvement. Employment growth held solid at the turn of the year at around 2.2%Y/Y to remain ahead of growth in the working-age population. However, the disparity in the state detail has to be taken into consideration. Though these numbers tend to be volatile from month to month, employment growth in both New South Wales (+4.1%Y/Y) and Victoria (+3.5%Y/Y) is very strong but is weak in the other states.
