Jobs surge: workforce on record growth run

An employment ­bonanza has lifted the share of working-age people who have jobs to a record 74.5 per cent.

Treasurer Josh Frydenberg seized on the jobs boom as evidence the economy was strong and ‘resilient’. Picture: AAP

An unexpected employment ­bonanza has lifted the share of working-age people who have jobs to a record 74.5 per cent, reducing the likelihood of immediate ­emergency cuts in interest rates and putting the government on track to achieve its workforce ­targets by 2024.

Treasury analysis obtained by The Weekend Australian shows the 74.5 per cent record reached in the December employment data is above the 20-year average share of about 72 per cent of people aged 15 to 64 in work.

Josh Frydenberg seized on the jobs boom as evidence the economy was strong and “resilient”, saying it “made a mockery of the doomsayers in the Labor Party”.

“Unemployment today is at 5.1 per cent compared to 5.7 per cent when the Coalition came to office and employment growth is more than double the OECD average and three times what it was under Labor,” the Treasurer said.

The stronger jobs growth follows a rebound in retail spending and house prices. After a series of weak readings, retail spending jumped 0.9 per cent in November from a month earlier, the largest increase since mid-2017.

Following cuts to the cash rate last year, house prices have begun rising strongly in capital cities and home loan approvals have started to rise, including for first-home buyers, who made up more than a third of approvals in November.

By dollar value, approvals rose 1.6 per cent in November, the ­latest month for which data was available, and were up 10 per cent over the year

The Morrison government struggled to reverse declines in business and consumer con­fidence over 2019, amid news of weak economic growth, sluggish retail sales and concerns about the trade war between the US and China. Westpac’s closely watched monthly confidence index fell by 1.8 per cent in January to 93.4, indicating more respondents were pessimistic than optimistic.

The stronger than expected jobs figures for December, released this week, show the share of women in work has also reached a record. In unadjusted terms, the participation rate for women rose to 61.7 per cent in ­December, the highest recorded.

The figures put the government’s target of 1.25 million new jobs by the end of 2024 within reach. Annual jobs growth of 2.1 per cent is tracking above the 1.9 per cent required to meet the target.

 

The jobs data will be watched closely by the Reserve Bank, which is due to meet on February 4 and must weigh its employment targets with the impact of the bushfire crisis that has wiped billions from economic activity and hit agriculture and tourism.

The 5.1 per cent December unemployment figure represented a 0.2-point fall from 5.3 per cent in October, prompting market economists to revise down the chances of a cut in the official interest rate by the Reserve Bank.

Investors had been factoring in a 60 per cent probability that the RBA would trim the cash rate to 0.5 per cent from 0.75 per cent, prior to the release of Thursday’s jobs numbers. On Friday, it was below 15 per cent.

“Despite domestic and international challenges, the Australian economy remains resilient as a result of the government’s ­economic plan,” Mr Frydenberg said on Friday.

ANZ economist David Plank said: “The recent strength in employment gives the RBA breathing space. We no longer expect a rate cut in February. We think the bank will want to see data on consumer spending over Q4 and January before acting. Plenty of jobs have been created over the past two months and even with the gain being in part-time, under­employment was steady at 8.3 per cent in December.”

The underemployment rate is the sum of the unemployment rate and the percentage of employed workers who would like to work more hours.

Westpac economist Bill Evans on Friday pushed out his expectation for the next cut in the official interest rate to April, instead of February, after the jobs figures emerged.

Mr Frydenberg said more than 260,000 jobs had been created in the past 12 months “while the number of people in jobs as a share of the population aged 15-64 has reached a record high of 74.5 per cent”.

He highlighted how 70 per cent of the extra 175,000 jobs for women were full-time.

Over the past three years, the participation rate — the share of people over 15 in or looking for work — increased by 1.3 percentage points. That compares with an increase of 0.5 percentage points in the US, 0.2 points in Britain and a 0.2-point fall in Canada, according to Treasury analysis.

“With a record number of ­people in work, welfare dependency is at a 30-year low, allowing the government to respond to natural disasters like the drought and bushfires within budget and without increasing taxes,” Mr Frydenberg said.

A likely delay in interest rate cuts pared back sharemarket gains this week, but the benchmark ASX200 is near an all-time high, closing at 7090 on Friday.

The Coalition achieved its 2013 promise, when Tony Abbott was prime minister, to create one million new jobs by 2018.