SCOREBOARD: Jobs jitters

Weaker-than-expected employment data for February doesn't change the picture of cautious hiring with a positive outlook.

The data

- Australian employment was weaker than expected in February, falling about 15,000, compared to the market forecast for a rise of 5000 and mine for 10,000.

- This reflected a 15,000 fall in part-time jobs (largely female) and a flat result for full-time jobs (males down 14,000).

- The unemployment rate rose to 5.2 per cent from 5.1 per cent as expected, while the participation rate slipped to 65.2 per cent from 65.3 per cent.

- By state, employment was up 3,000 in NSW (UR unchanged 5.2 per cent), while in Victoria, jobs fell 12,000 and the UR rose to 5.4 per cent from 5.2 per cent. For Queensland, 18,000 jobs were lost and the unemployment rate rose to 5.7 per cent from 5.4 per cent. Then in SA, 3000 jobs were lost and the UR rose to 5.2 per cent from 5.1 per cent. Finally for WA, 3000 jobs were created and the unemployment rate fell to 4 per cent from 4.1 per cent.

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What it means

All up a reasonably neutral result. The full-time jobs growth that we saw over the previous couple of months (cumulative 38,000) has been retained this month, which is a good sign, and job losses in February were all in part-time. But that follows a 38,000 increase in part-time last month. Noise.

I’d say there is no real change then to the well-established patterns that we’ve seen over the last year or so – basically since December 2010. Firms are not really hiring, they are certainly cautious, but there is no evidence of massive job shedding, and personally, I doubt that will come with domestic demand growing well above trend. Smoothing out some of the volatility, we’ve seen 6000 jobs lost over the last 3 months with all of that part-time (down 45,000).

That hours worked jumped again, tells you there is demand for labour there, but as has been a feature of the labour market for some time, employers seem to be making do with the existing workforce, by and large, and meeting increased demand by cracking the whip and making existing workers give even more of their precious blood.

For policy there is no smoking gun here for another cut then. Recall that the RBA said they want to see a material decline in demand and, realistically, today’s numbers don’t show that. Nor did yesterday’s. Same old then – data watch.

The outlook, the ways things stand, looks quite good I would have thought. Domestic demand is quite strong – especially manufacturing – and realistically, this usually equates to solid jobs growth. Employer caution can probably be put down to concerns over the global environment then. With that stabilising and prospects in the US actually improving, I suspect we’ll see a pick-up in jobs growth going forward.

Adam Carr is senior economist at ICAP Australia. See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.

Follow @AdamCarrEcon on Twitter.

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