January’s weaker than expected jobs outcome showing a 3.7k dip in employment follows a downwardly revised December’s jobs’ drop of 23k (originally reported fall of 22.6k jobs). January’s employment outcome substantially undershot market expectations which centred on a 15k increase {CBA (f) +20k}. The disappointment in the headline result was compounded by the detail which showed that full-time jobs fell by another 7.1k in January after December’s revised 32.1k (originally reported 31.6k) contraction. In January, a 3.4k rise in part-time jobs partially offset the full-time jobs drop. Over the last three months the economy has shed 10.4k jobs including 26.8k full-time positions.
Today’s figures once again confirm a soft labour market and reflects an economy that is growing at a sub trend pace. Indeed, over the past year, employment growth has flat-lined (0% growth) with a measly 1.4k jobs created – with 91.2k fulltime jobs disappearing. This was offset by a solid 93.1k part-time jobs lift. At the same time, despite a 0.8% fall in the participation rate to 64.5%in the past year, the unemployment rate has spiked higher (by 0.6%) to 6.0% from 5.4%.
The unemployment rate would be somewhat higher had it not been for declining labour force participation. The part rate remained steady at 64.5% in January and is at its lowest level since April 2006. To us, the decrease in the part rate mainly
reflects structural forces – the ageing of the population. The fall is being magnified by the cyclical impact of a soft labour market. We expect this to continue over the near-term and the combination of these two factors should continue to cap the overall rise in the unemployment rate.
Read the full report: Economic Research
Commonwealth Bank