Employment in Sept in a few charts

The employment situation in September remained weak and there were even some signs of deterioration.

This month, growth in FT employment has continued to slow, yet FT hours have grown. Growth in total unemployed persons continues to slow down (but total numbers remain high) and there is growth in PT employed persons and PT hours. Put this way, these points make it sound like the labour market is set for recovery. Some of the commentary in the media has taken the angle that rising hours is a sign that improvement in the labour market is underway. I wanted to prove or disprove this theory and dug deeper into the hours worked and employment data. The source of any ‘strength’ can easily be narrowed down to one or two states only – QLD and to a much lesser degree WA. The employment situation in the remaining states is weak and I would argue, worsening, in some of the larger states such as NSW and VIC.

I’ve started using trend data to analyse employment. This data series that can be used to look at month on month changes, as well as the usual year on year. It also removes the monthly volatility from the survey results. See explanation from the ABS here.

Summary of Employment in Australia

Source: ABS

The annual growth in employment of 106k persons is very low by historical standards – the ten year average (excluding Sept 2013) is +224k growth. The good news – the growth in the number of unemployed persons is slowing down as well – last month the annual growth figure was +70k, this month +59k versus the same time last year. But note that total unemployed persons are still growing as a group.

The overall growth figure in total employed persons disguises the main issue for our economy at the moment;

Growth in PT employed now accounts for 93% of the annual employment growth. Growth in FT employment is poor, and deteriorating, on every time measure.

Source: ABS 

Clearly the rate of decline in FT jobs growth is not as pronounced as during the GFC (slope is not as steep), but its approaching zero growth nonetheless and showing no signs of abating.

This is difficult to reconcile with the growth in FT hours worked. In the September survey, PT hours worked grew by +3.85% and FT hours grew by +1.15%. Some believe that growing hours are a sign of near-term improvement:

Source: ABS 

Historically, growth in PT and FT hours diverge during a recession or lower growth periods. It’s easy to see this divergence line up in the chart above with the recessions/slow-downs of 1981/2, 1991/2, 2001 & 2008 (green circled areas). It seems logical that during times of weaker demand, the economy shifts to more PT employment. But we are currently in a situation where FT hours are growing too and you could argue that this is consistent with the economy currently enjoying a small blip in demand possibly as a result of numerous interest rate cuts as well as a lower $A.

But is it a sign that the labour market is about to see an improvement? Just to be sure, I dug a little deeper into the state by state data for hours worked – unfortunately the state by state data isn’t broken down by FT/PT. But this data still says something interesting;

Source: ABS 

Annually, growth in hours has been driven predominantly by QLD. Annual growth in NSW, VIC & WA is below the National average.

The issue is that the shorter time frames (red & green bars) point to a slow-down in growth of working hours compared to the annual rate of growth. The exception is SA, TAS & ACT where hours have been declining and are now declining at a lower rate.

In the last 3 months and on a month on month basis, hours worked has deteriorated such that only QLD, WA and NT recorded any growth in aggregate working hours.

As such, the current growth in aggregate hours worked is not an accurate reflection of the situation in all states and possibly only points to continued employment growth in QLD, WA and/or NT. The slowing of the decline in SA, TAS and ACT could be a positive trend. We’ll have to wait and see. But for the moment, these states aren’t contributing to growth in hours worked.

Looking at the FT v PT employment situation on a state by state basis provides some further insight into this issue as well.

The next two charts compare FT and PT employment growth annually versus the shorter time period of the last 3 months.

Source: ABS 

VERSUS that same picture over the last 3 months;

Source: ABS

  • National – Annual FT employment growth has gone from +7.3k persons to a decline in FT employed persons in Sept v July 2013 of -3.79k persons.
  • NSW – the annual decline in FT employed persons has accelerated over the last 3 months – FT employed persons has declined by 15.91k persons in Sept v Jul 2013. Growth in total unemployed remains on its recent high, averaging +26k each month for the last 4 months
  • VIC – the annual growth in total employed persons is all PT employment and in the last 3 months even PT employed persons has declined. Growth in unemployment is still high, but growing at a decreasing rate now
  • QLD – the only state to record decent growth in FT employed persons over the year and over the last 3 months. But even PT employed persons has gone backwards in the last 3 months
  • SA & TAS are both recording annual declines in both FT & PT employed persons and total unemployed persons continues to grow
  • WA is no longer the powerhouse of employment growth, but is at least registering some growth in FT employed persons. Growth in total unemployed persons is slowing down (it’s still growing, but at a decreasing rate)

To balance out the picture, growth in total unemployed persons is slowing down. But it’s a case of still growing, but growing at a decreasing rate – only in QLD and ACT has growth slowed to zero.

Source: ABS 

As mentioned in the previous post, the leading indicators are mostly all pointing to more of the same.

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