A massive Australian August employment gain was recorded by the Australian Bureau of Statistics (ABS). A total of 121,000 new jobs were created, the largest increase since records began in 1978. Analysts had been expecting about one tenth of that amount.
The country’s seasonally adjusted unemployment rate fell 0.3% of a percentage point in August to 6.1%.
The labor force participation rate, i.e. the percentage of adults able to work who are in employment, rose 0.4% of a percentage point to 65.2%.
Australia’s labor force in August grew by 121,000 to 11,703,500. The growth was mainly driven by a surge in males (+65,400) and females (+41,300) working part time. In trend terms, there was an 18,700 increase in the number of workers employed.
The average number of hours worked (seasonally adjusted aggregate hours worked) increased by 0.1 million hours, less than 0.01%, to 1,609.5 million hours.
In August, there were 755,100 unemployed Australians, a decline of 33,500 compared to the previous month.
The underemployment rate stood at 8.5% in August, a rise of 0.7 of a percentage point from May. Australia’s total labor force underutilization was 14.% in August, compared to 14.5% in May. The figure is a combination of unemployment and underemployment statistics.
Recession fears alleviated
When July’s unemployment rate reached 6.4%, a twelve-year high, there was serious concern among economists that the Australian economy might be sliding into a recession.
Since then, things appear to have picked up marginally. GDP (gross domestic product) grew by 3.1% while retail sales and home construction have performed well.
Labor demand has accelerated, with the ANZ survey of job ads increasing for the third successive month in August.
However, earlier this month Glenn Stevens, Governor of the Reserve Bank of Australia (RBA) warned that a sustainable decline in unemployment is not likely to start until the second half of 2015, which added to speculation that an interest-rate hike is not likely to occur in the medium future.
Mr. Stevens said:
“The Bank’s assessment remains that the labour market has a degree of spare capacity and that it will probably be some time yet before unemployment declines consistently.”
The RBA has kept the benchmark interest rate at 2.5%, a record low, in an attempt to boost domestic demand following the decline in mining investment.
Consumer sentiment linked to job prospects
Household spending and consumers’ long-term expectations are being weighed down by concerns about jobs. The Westpac-Melbourne Institute Consumer Sentiment Index declined by 4.6% in September to 94 from 98.5 in August.
Bill Evans, Westpac’s Chief Economist, said:
“This is a surprising and disappointing result. Following the 6.8% plunge in the Index in the aftermath of the Commonwealth Budget in May, the Index had stabilized and was gaining ground. From June to August the Index had lifted by 5.9% to find it only 1.3% below the pre-Budget level. The Index is now 5.8% below the pre-Budget level and only 1.1% above the post-Budget print.”