Momentum in the recovery of the Australian labour market stalled in September reflecting the impact of Victoria's shutdown, though employment gains in the other states moderated at the same time. Despite a decline in the level of employment and a rise in the unemployment rate, hours worked were able to advance in the month.
Labour Force Survey — September | By the numbers- Employment (on net) declined by 29.5k (seasonally adjusted) in September, though this was less severe than anticipated (-40.0k) and August's initially reported gain of 111.0k was revised up to 129.1k. A further 35.5k jobs were lost in Victoria as the shutdown in the state persisted.
- The national unemployment rate lifted by 0.09ppt to 6.94% — slightly below consensus for a rise to 7.0%.
- Workforce participation rate ticked down from 64.87% to 64.76%, weighed mostly by a 1.04ppt fall in Victoria (to 62.99%).
- Aggregate hours worked advanced by 0.5% in the month coming off a soft reading in August (-0.1%) to 1.688bn hours (-5.0%yr), though outcomes across the states were mixed.
Labour Force Survey — September | The details
Whereas employment defied expectations in August rising by 129.1k (on a revised basis) against a forecast decline of 35.0k, the weakness that has been evident in the high-frequency payrolls data recently showed up in today's report for September. Total employment fell by 29.5k in the month (full time -20.1k and part-time -9.4k), stalling the recovery that has been taking shape since the reopening of the national economy in mid-May.
The main factor in this outcome was the further deterioration in conditions in Victoria as the shutdown of the state following a second wave of virus infections continued. Employment in Victoria fell by 35.5k following on from a 37.2k decline in August. Compared to its pre-pandemic level in March, Victorian employment as of September is lower by 218.8k. Tasmania was the only other state to see employment fall in the month (-2.5k). However, in the states where employment lifted, the gains were generally much more modest in September compared with August; New South Wales +3.3k from +34.0k, Queensland +32.2k from +56.0k and Western Australia +2.9k from +31.8k. South Australia saw a slight elevation to +8.7k from +7.3k in August.
Despite the momentum in employment stalling in September, hours worked lifted by 0.5%m/m nationally to be up by 1.7% over the quarter. Outcomes across the states were mixed with gains in New South Wales (2.1%), Queensland (1.7%), South Australia (1.5%) more than offsetting declines in Victoria (-2.1%), Western Australia (-0.1%) and Tasmania (-2.2%).
In terms of the recovery, the pandemic and ongoing restrictions continue to have a greater impact on hours worked than on employment, though the latter is being partially covered by the Government's wage subsidy scheme. The level of hours worked is 5.1% down on pre-pandemic times compared to a 3.3% contraction in the level of employment.
The effects of this can be seen in the measures of underemployment and underutilisation. Although the unemployment rate lifted to 6.94%, both underemployment (+0.1ppt to 11.38%) and underutilisation (+0.2ppt to 18.32%) remain significantly higher reflecting that many Australians either cannot get (or are not able to due the restrictions) work as many hours as they would like.
The other factor to consider in this is that these increases in unemployment, underemployment and underutilisation occurred despite a fall in the level of workforce participation. Nationally, the participation rate fell by 0.12ppt to 64.76%, stalling its recovery. This was almost exclusively due to a collapse of 1.04ppt in participation in Victoria to a 16-year low at 62.99%. There were also modest declines in Western Australia (-0.14ppt to 67.74%) and South Australia (-0.05ppt to 62.49%).
Labour Force Survey — September | Insights
Today's report showed the impact of the Victorian shutdown on the recovery in the national labour market with employment declining, though not as severely as anticipated, resulting in the unemployment rate ticking up even as the level of workforce participation eased. The positive aspect was that despite these dynamics, hours worked still advanced in September to record a robust gain over the quarter.
