Part time employment also rose, and there was an upward revision to the previously reported gain for July, too. More people entering the labour force in August (that is, a higher participation rate), though, meant the unemployment rate stayed at 5.6%, albeit as economists had anticipated.
The net 54,200 monthly gain in employment nation-wide last month was underpinned by a healthy 40,100 rise for full timers (albeit after a fall in July), and a 12,100 rise in part time positions. This takes total gain in employment so far this year to nearly 270,000 positions, of which more than 200,000 have been full time. Annual growth in total employment shot up to 2.7%oya last month, the fastest rate of growth since late 2015. The icing on the cake was that hours worked across the workforce also rose in August.
The unemployment rate now has been at 5.6% for three straight months. The jobless rate had dipped to a four-year low of 5.5% back in May, but seems to have stabilised. This is despite the rise in participation, which usually is a positive sign of healthy underlying labour market conditions. By state, New South Wales retained the lowest jobless rate at 5.0%, and Victoria still has the highest rate at 6.1%. There was a sharp rise in the unemployment rate in Western Australia to 5.9%, but material falls for Queensland and South Australia.
The leading indicators of employment continue to improve, including just this week in the NAB’s latest survey of business conditions and confidence. This suggests there are further decent employment outcomes ahead and, probably, a lower unemployment rate. A sustained rise in wages growth (which is at a record low) remains elusive, but faster wage gains usually follow sustained improvements in labour market conditions.
There are important messages for company directors in today’s data. The run of very good employment reports this year strengthens the case for official interest rates to rise, although isolated pockets of weakness in the economy mean the first rate hike from the RBA probably will not be before year-end. Another message is that pressure for wage increases already is building, particularly in the sectors of the economy bolstered by huge public spending on infrastructure. Labour shortages in engineering construction already are emerging in Sydney, for example.
The broader message probably is that today’s jobs data reinforces the perception that general economic conditions in Australia are improving, with other recently released data showing healthy business conditions (albeit alongside softer confidence) and higher investment in the year ahead. This is alongside green shoots emerging in key offshore economies, too, where interest rates already are rising. Interestingly, AUD shot up nearly half a cent after the release of the jobs data, and now sits back above 80 US cents.