Once again we saw the one great success story of the Turnbull/Morrison governments on display with better than expected jobs performance in January. The strong (at times record) jobs growth of 2017 now appears to have a second wind after a relative slowdown last year; January was the third month in a row of strong growth, especially in full-time employment. It’s one reason why the defeat of the Coalition isn’t quite as certain as many think — and augurs well for the Berejiklian government in NSW, which is presiding over a jobs boom.
According to the ABS, the unemployment rate on a trend basis was steady at 5.1% (December’s rate was revised up from 5.0% to 5.1%), while on a seasonally adjusted basis it was unchanged at 5.0%. In trend terms, employment rose by 24,900 last month, with full-time employment increasing by 16,800.
Better yet — and the real reason the government can be proud — is that the trend employment to population ratio rose to a 10-year high of 62.4%, while the trend participation rate was steady on 56.7% (a multi-year high). The ABS also pointed out that the 15 to 64 year old (the key employment cohort) employment to population ratio reached a historical high of 74.1%, with almost three of every four working age Australians now employed. In the year to January, 295,500 jobs were created on a trend basis, or annual growth of 2.4% — slightly better than the 2.3% in December and above the average annual growth over the past 20 years of around 2%.
NSW is the epicentre of jobs growth — in trend terms, unemployment is just 4.1%, and 3.9% in seasonally adjusted terms, after 47,000 jobs were added in January. It’s far ahead of any other state and that’s great news for a Coalition government going to the polls for a third term in March.
The jobless rate in Victoria is 4.5%, but it’s over 6% in Queensland, South Australia and Western Australia (where unemployment surged to 6.8% seasonally adjusted). Where’s the talk of a “two-speed economy” of the kind that marked the reverse situation of the mining boom a few years back?
It’s no coincidence, of course, that NSW in particular and Victoria are also the epicentres of immigration, rising population and infrastructure stress. But it also means that the coming federal election will be even more divided along state lines than normal, with Queenslanders and Western Australians reacting to quite different economic circumstances than voters in Sydney and Melbourne.
The figures were so good that they’ll keep talk of a rate cut from a worried Reserve Bank at bay for a few more months. Only a further steep plunge in house prices in the next three months and weak retail sales data would override the positive message the strong labour market continues to produce — even though Westpac’s Bill Evans has now joined AMP’s Shane Oliver in predicting at least two rate cuts this year.
The one dark spot continues to be wages growth. The jobs boom has barely shifted the dial on wages growth, despite much cheering from the government and the RBA. Yesterday the ABS released Average Weekly Earnings (AWEs) data for the six months to November which showed a rise of just 2.4% across the year — only a fraction above the 2.3% rise in the Wage Price Index in the December and September quarters. There wasn’t any acceleration in the second half of 2018 either — growth was uniform across the year, and only up a touch from the 2.3% rate in the six months to November 2017 and 2.2% in the six months to November 2016.
That’s one of several reasons why a federal government that has presided over a jobs boom appears to be getting zero credit for it from voters.