Jobs market approaching full employment

Labour force data released by the Bureau of Statistics yesterday shows the Australian jobs market continues to outperform expectations.  The unemployment rate across the country has fallen to just 5.1% in seasonally adjusted terms.   The falling jobless rate has sparked debate that there is likely to be more upwards pressure on interest rates as higher employment fuels wages growth, which drives spending and ultimately pushes inflation higher.
National rate of unemployment

Full time jobs creation is now higher than part time jobs creation as the number of new full time jobs continues to trend upwards quite steeply after the negative movements recorded in 2009.  Over the last year there were just over 267,000 new full time jobs created – the highest annual growth figure since the 12 months ending November 2007.  The rise in full time jobs is also starting to ease the level of underemployment – good news for those workers seeking more hours.
Annual growth in flull time v part time jobs

The fastest growing full time jobs market’s are in Western Australia and South Australia where the number of full time jobs created over the last year have increased by 6.0% and 5.7% respectively.   At the other end of the spectrum is Tasmania where the number of full time jobs has actually declined over the last year.

Percantage growth in full time jobs

Tasmania is also leading the nation in terms of unemployment with 6.0% of the workforce unemployed.  The Northern Territory and ACT continue to be regions where the jobs market is the tightest.  Unemployment across the two territories is just 3.o% and 3.1% respectively.

Unemployment rate by state

With such strong labour force figures it will be important to monitor wages growth and consumer spending closely.  There is already wide spread speculation that the banks are likely to raise mortgage rates regardless of any RBA moves on the cash rate.  The labour force is moving back to capacity quite quickly (many economists regard an unemployment rate of 5.0% as ‘full employment’) which may also reignite the debate on population growth.  As a nation we are going to struggle to fill jobs in key industries where there is already a demonstrated short fall of skilled workers.

About Tim Lawless

Tim heads up the RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia

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