Employment boom may have done its dash

The nation’s jobless rate has risen to 3.5 per cent in August, as the economy added 33,500 jobs, but it remains at a near 50-year low.

There are signs the great pandemic jobs boom may have peaked, economists say, after the key jobless measure ticked higher in August to 3.5 per cent.

Despite the 0.1-percentage-point increase, unemployment ­remained around the lowest levels since 1974 and well below the roughly 5 per cent rate of early 2020 before Covid-19’s arrival.

There were also an additional 33,500 jobs recorded in the month, figures from the Australian Bureau of Statistics revealed. That was driven by a 58,800 rise in full-time employment to 9.5 million people in August, offset by a 25,300 drop in part-time roles, to 4.1 million people.

 

But instead of falling, the ­unemployment rate increased as more Australians looked for work.

After three months in the mid-3s, Barrenjoey chief economist Jo Masters said the unemployment rate may have found a floor. With the drop in unemployment spread across age groups and the country, Ms Masters said “there is going to be a limit to how low the unemployment rate can go”.

“We expect incremental falls in the unemployment rate will be harder to achieve,” she said, as employers find it increasingly difficult to fill a massive backlog of vacancies, which now roughly equal the number of unemployed people across the country.

Citi chief economist Josh Williamson agreed, saying “given the strength in the labour market, it’s likely that the economy will run out of suitable labour before it runs out of jobs”. Ongoing tightness in the labour market was ­underlined by a fall in the underemployment rate – which measures those with jobs but who would like to work more hours – to 5.9 per cent from 6 per cent, the seasonally adjusted data showed.

Mr Williamson said competition to attract appropriately skilled staff should feed through to stronger pay rises, which have largely been absent despite the tightest labour market in decades.

Employment Minister Tony Burke in a statement said “more Australians are in jobs and getting the work hours they want – but they’re still not getting the wage increases they need”.

“These results once again demonstrate why we need to update the workplace system and close the loopholes that are undermining wages growth,” Mr Burke said.

With job vacancies still at historical highs but no longer growing, CBA senior economist Stephen Wu said 3.5 per cent could be “around the floor”. “Over time, the impact of the RBA’s ­recent interest rate rises will see the unemployment rate trend higher, though that is a story for 2023,” Mr Wu said.

ANZ senior economist Catherine Birch, however, said she still believed unemployment would fall below 3 per cent by early next year as employers filled vacancies in coming months.

After four straight rate rises of 0.5 percentage points, analysts said the jobs figures would not sway the Reserve Bank from ­potentially slowing the pace of hikes to a “business-as-usual” 0.25-percentage-point move next month. Youth unemployment jumped to 8.4 per cent after dropping to 7 per cent and the lowest level on record in July.