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Unemployment has risen from its low last November and the growth in monthly hours worked is slowing, ABS data shows.
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Jobless rate up to 3.9%, ‘hints of softer labour market’
14 December 2023
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Unemployment moved up to 3.9 per cent in November from a revised 3.8 per cent in October, according to seasonally adjusted data released today by the ABS.
The number of jobless rose by 61,000 in the month against just 19,000 additional workers, fuelling the increase, although most of the metrics from participation rate to the number of hours worked increased.
ABS head of labour statistics Bjorn Jarvis said the number of jobs available was rising in line with higher migration levels.
“The combination of strong growth in both employment and unemployment in November saw the employment-to-population ratio return to a record high of 64.6 per cent and the participation rate reach a new high of 67.2 per cent,” he said.
“We have continued to see employment growth keeping pace with high population growth through 2023. The employment-to-population ratio has been high for a long time now, between 64.3 per cent and 64.6 per cent for the past 18 months.
"Similarly, participation continues to be high. In addition to strong employment growth over the past year, the number of unemployed people has also increased by around 81,000 people, and the unemployment rate has risen by 0.4 percentage points. However, both unemployment measures remain well below their pre-pandemic levels.”
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The unemployment rate has risen half a percentage point since its low of 3.4 per cent a year ago, but it hit a high of 7.2 per cent during the first six months of the pandemic and has mainly been trending downwards since.
However, Mr Jarvis said there were signs the labour market was easing with monthly hours worked rising by less than 0.1 per cent in November, following strong growth during late 2022 and early 2023.
“The slowing in hours means that overall growth rates in employment and hours worked are now similar over the past 18 months. The narrowing gap between these two growth rates suggests that the labour market is now less tight than it has been.”
“The increasing unemployment rate since November 2022, along with the rising underemployment rate and a slowdown in hours growth, may suggest that the labour market is starting to slow.”
BDO economics partner Anders Magnusson said the ABS data showed the labour market had been surprisingly resilient to higher interest rates.
“Though labour market indicators in recent months have continued to indicate a softening, we are only now seeing this clearly flow through to the unemployment rate,” he said. “Monthly hours worked stopped trending upwards in June and the underemployment and underutilisation rates did the same around the same time.”
The underemployment rate was steady at 6.4 per cent in November while the underutilisation rate, which combines the unemployment and underemployment rates, rose 0.3 percentage points to 10.4 per cent.
But Mr Magnusson said the Australian labour market had soaked up a substantial increase in population over the past year, primarily from migration, with the employment-to-population ratio holding steady.
“This shows that the labour market is absorbing workers at the same rate that migrants are arriving and suggests that the increase in demand from new migrants is at least keeping up with the increase in labour supply.”
The figures also supported recent comments by the central bank that suggested wage growth was slowing.
“The increase in unemployment rate follows the RBA’s statement earlier this month that wage growth is not expected to increase much further. Together, this gives comfort that services inflation is slowing and decreases the chance of further cash rate increases in this cycle.”
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