Tue, Feb 07, 2023 @ 05:45 GMT
HomeContributorsFundamental AnalysisAustralia December Labour Force: Disrupted by Greater than Usual Illness

Australia December Labour Force: Disrupted by Greater than Usual Illness

Total employment: -14.6k from 58.3k (revised from 64.0k). Unemployment rate: 3.5% from 3.5% (revised 3.4%). Participation rate: 66.6% from 66.8% (unrevised 66.8%). We suspect we have now past the low in unemployment.

Total employment declined by 14.6k (0.1%) in December 2022, following an increase of 58.3k in November (revised from 64.0k) and an average monthly growth of around 40k between August and November.

Monthly hours worked decreased by 0.5%, greater than the decline in employment, for the second consecutive month following and hours worked peak in October.

The decline in employment and hours worked in December followed strong growth in both through 2022, with an annual growth in employment of 3.4%yr and hours worked of 3.2%yr.

There appears that a lift in illness could have been a drag on employment with the number of people working reduced hours due to illness increasing by 86k to 606k which is over 50% higher than we would usually see at this time of the year.

We were surprised that the number of people working fewer hours due to annual leave, flextime or long service leave decreased 489.2k to 842.6k in December 2022. The proportion of employed people taking annual leave in December 2022 was 6.1%, slightly below the pre-pandemic December average of 6.7%. Having been the first clear summer break since the Covid pandemic we had thought that the number on leave would be higher than average in December.

The increase in the number effected by illness may also be why there was a 0.2ppt decline in participation to 66.6%. This led to a 8.8k decline in the labour force which was enough to hold the unemployment rate flat at 3.5% (revised from 3.4%). At two decimal places there was an almost 0.1ppt rise in unemployment from 3.47% in November to 3.51% in December. It was rounding that held the unemployment rate flat at 1 decimal place.

The underemployment rate lifted to 6.1% from 5.8% and is not back to where it was in June 2022. Given just how tight the labour market is it is somewhat surprising there has not been a great improvement in underemployment given just how far unemployment has fallen. Given we expect the unemployment rate to start to rise through 2023 it looks as we have past the low point for underemployment.

Employment declined in all stated except in SA and WA (both +0.3%) while NSW has the lowest unemployment rate at 3.1% (a 0.1ppt decline in the month) and SA has the highest rate for a state at 3.9% (also a 0.1ppt decline in the month).

December is always a tricky month as there is normally a last minute run up in employment (in original terms) before the Christmas/summer holidays. This December employment lifted 69.1k in original terms.

Westpac Banking Corporation
Westpac Banking Corporationhttps://www.westpac.com.au/
Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.

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