The growing strains in the Australian labour market were underlined this morning in the latest employment figures, which showed that while the unemployment rate fell to its lowest in a year, that was due to people leaving the workforce faster than new jobs were created.
And those new jobs were all part-time, not full-time, which fell. The data confirms that as far as the labour market is concerned, the economy is more of a puzzle for governments, business and the Reserve Bank. There is still some job-creating strength evident in the economy, but it faded quite noticeably in April.
The departure of more than 28,000 people from the ranks of the unemployed is the real worry because it shows people are becoming discouraged about the chances of finding new jobs. That is a sign of the impact daily reports of job losses is having on confidence among the unemployed. In fact nearly twice as many people stopped looking for work in April compared with the number of new (all part-time) jobs that were created last month, according to the ABS figures.
The figures give support the the Reserve Bank’s warning in its second monetary policy statement of last Friday that job shedding was a downside risk for the economy in the coming year.
Like the strong retail sales figures earlier this week (a rise of 0.9% in March against forecasts for a rise of 0.2%), the market forecasts were well wide of the market. They called for a fall of 4000-5000 jobs and the unemployment rate rising to 5.3%.
Overall, the unemployment rate fell to 4.9% last month (seasonally adjusted), down from a restated 5.1% (5.2% originally reported) in March, according to the Australian Bureau of Statistics. The trend unemployment rate remained steady on 5.1%.
The ABS said overall employment rose 15,500 to 11,501 million as full-time employment fell 10,500 to 8062 million (down from the 15,800 full-time jobs created in March), but part-time employment rose 26,000 to 3438 million (against 28,200 new part-time jobs that were created in March). The trend figures for overall employment rose 10,600 in the month. With 44,000 new jobs reported in March, the extent to the slide in April is quite sharp, about 29,000 in fact.
Unemployment fell 28,800 (or 4.6%) to 598,200, seasonally adjusted, thanks to a fall of 22,000 in the number of people looking for full-time work (a fall of 4.9%) and a 6800 drop in the number of people looking for part-time work. The 22,000 people who stopped looking for full-time work was sharply up on the 3100 people who stopped looking for full-time work in the March ABS figures, and contrasts with the rise in unemployment in February thanks to an extra 16,400 people looking for full- and part-time work.
The participation rate decreased 0.1 points to 65.2%, (down from a downwardly revised 65.3% in March) but aggregate monthly hours worked increased 6.6 million hours to 1633.9 million hours. Aggregate hours worked in April 2012 were 2.6% higher than in April 2011.
The news saw the steady easing in the value of the Australian dollar halted, the currency bounced half a cent to trade around $US1.010 just before noon.
In Tuesday night’s budget, the government forecast a gradual rise in employment to 5.5% in the 2012-13 financial year (In the 2011-12 budget they had forecast an unemployment rate of 4.75%, easing to 4.5% in 2012-14, plus half a million new jobs this financial year, which clearly isn’t happening).
The immediate reaction among analysts and economists was that the report will see the RBA delay the next rate cut. That may or may not happen, but this is not a healthy jobs report and shows some people who couldn’t find full-time work just stopped looking rather than switch to part-time work. As well, the rise in part-time employment is another classic sign of a strained labour market with full-time employers (especially casual full-time employees) being switched to part-time work by employers uncertain about future demand and orders.