Jobs growth disappoints in June

Employment growth was weaker than expected in June, as the jobless rate remained stuck at 5.2pc.

The unemployment rate remained unchanged at 5.2pc. Picture: AAP

Australia’s jobless rate remained stuck at 5.2 per cent in June, as official data showed hefty job losses in the large eastern states were offset by a fall in unemployment in Western Australia.

Jobs growth was weaker than expected, leaving the unemployment rate well above levels desired by the Reserve Bank.

The number of people employed rose by 500 on a seasonally-adjusted basis, the Australian Bureau of Statistics said, compared with an expected 9000 increase.

The number of people in full-time work rose by 21,100 in June, while those in part-time work fell by 20,600. The drop in part-time work may reflect the conclusion of election campaigning in May.

The less volatile “trend” measure of employment showed a solid 26,000 increase in the number of Australians with a job over the month of June.

There was also welcome slide in underemployment – where workers want more hours or are engaged in ill-suited work – from 8.6 per cent to 8.2 per cent on a seasonally-adjusted basis.

On a trend basis, the participation rate – which shows the amount of people either engaged in work or looking for a job – rose to 66 per cent.

ABS Chief Economist Bruce Hockman said this means nearly two of every three people are currently participating in the labour market.

“The participation rate for 15 to 64-year-olds was even higher and closer to four out of every five people, “ Mr Hockman said.

In seasonally-adjusted terms, the largest falls in employment were in New South Wales, which shed 17,400 jobs, followed by Queensland, down 8,200 jobs, and in South Australia and Victoria, which saw employment slide by 4,700 and 4,100 jobs respectively. The only increase in employment was in Western Australia, up 13,800 jobs.

Victoria’s unemployment rate rose 0.2 per cent to 4.8 per cent, while Queensland’s jobless rate rose by the same margin to 6.5 per cent. South Australia’s jobless rate increased 0.2 per cent to 5.9 per cent, while the unemployment rate in NSW held steady. Western Australia’s jobless rate fell 0.5 per cent to 5.8 per cent.

Meeting minutes from the Reserve Bank of Australia’s July board meeting, released this week, showed the central bank had left open the prospect of further interest rate cuts in coming months if conditions in the job market don’t improve.

The RBA cut its official cash rate in June and July, marking the first back-to-back reduction since 2012. The official cash rate now stands at a record low 1.0 per cent.

The RBA has cut interest rates to push the unemployment rate lower over time, as its senior economists now estimate an unemployment rate of 4.5 per cent represents full employment.

Australia’s unemployment rate several months ago hit a decade low of 4.9 per cent, but has since risen to 5.2 per cent.

Second-quarter GDP growth data, to be published in September, is expected to show the economy growing by about 1.5 per cent on-year, well below the rate needed to bring the unemployment rate down. Living standards on a per-capita basis have slid backwards for the past three quarters in a row as the economy stagnates.

The RBA’s head of economics Luci Ellis recently said the central bank’s modelling showed there was a good chance “full employment” — the lowest level of unemployment without a breakout in inflation — was even lower than the recently revised estimate of 4.5 per cent.

Financial markets continue to price in a strong chance that interest rates will be cut again before the end of the year, and a number of economists believe the RBA’s cash rate could be cut to as low as 0.5 per cent by mid-2020.

RBA governor Philip Lowe has sent a shot across the bow of the government to restore the growth potential of the economy by embarking on productivity-enhancing reforms.

With Dow Jones Newswires