WEEKLY E-MAIL

19 September 2023

LATEST EMPLOYMENT DATA

By Rebecca Dhillon

Latest employment figures from the Australian Bureau of Statistics (ABS), show that the seasonally adjusted unemployment rate remained unchanged at 3.7% for August, with the participation rate hitting a record high of 67% – indicative that decade-high interest rates are yet to soften demand in Australia’s tight labour market.

Part-time jobs accounted for 96% of the increase in employment, resulting in the underemployment rate lifting to 6.5% (underemployment refers to individuals who are currently working but would like to be working more). Despite an increase in part-time jobs, almost all of the increase in employment over the past three years has been the result of an increase in full time work.

The increased participation rate is largely being driven higher by strong migration, with 454,400 of the increase in the population over the 12 months to March being migrants (80% of population growth). The higher participation rate also coincides with the release of June quarterly data which shows the number of multiple job holders has hit a record high, with 958,600 people having more than 1 job. This number is expected to increase further as employees seek additional working hours to combat the rising cost of living.

Many economists do not expect the tight labour market to persist, with many believing it is unclear for how long the economy will remain strong enough to absorb high rates of population growth. There is a risk that migration growth will out grow demand from employers, leading to higher unemployment, and despite the strong headline growth numbers for August, the RBA believes the increase in underemployment is indicative that the jobs market is cooling.

While the August employment figures are unlikely to alter the Reserve Bank of Australia’s (RBA) monetary policy strategy, some economists believe the stable unemployment rate supports expectations of a prolonged monetary policy pause. Earlier this month, the RBA held the official cash rate at 4.1% – the third consecutive pause following cumulative rate hikes since May 2022.

Treasurer Jim Chalmers has warned that high interest rates, moderating inflation and continuing global uncertainty – particularly the slowdown in China – will inevitably weigh on our economy and labour market in the year ahead.

Rebecca Dhillon
Senior Para-Planner
Authorised Representative No. 453075

If you have any questions or comments, please email me at rebecca@gfmwealth.com.au

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