Australia’s June Labour Force Demonstrates Limited Signs of Letting Up

Australia’s June labour force showed remarkable resilience, with employment growth exceeding expectations. The month saw an increase of 32.6k jobs, a 0.2% rise that surpassed Westpac’s prediction of a 25k boost and far exceeded the median market forecast of a modest 15k increase. Throughout the first half of 2023, employment growth maintained an impressive pace, with the average three-month change remaining above 40k per month. This rate is significantly higher than the pace in the latter half of 2022 (+26k per month) and nearly matches the overall increase seen last year (+42k).

Despite the rapid employment growth, the quality of job growth has not suffered. Full-time positions accounted for around 86% of new jobs over the past six months, with an increase of 218.4k compared to the 35.9k rise in part-time work. This trend mirrors the early stages of job recovery post-COVID-19, contrasting sharply with pre-pandemic years when full-time employment made up a smaller majority (approximately 60%) of job growth.

Further emphasizing this trend, the seasonally adjusted hours worked continues to rise robustly, once again outpacing employment growth with a 0.3% increase in June. Year-to-date, hours worked have increased by 3.0%, which is notably higher than the same period last year (1.9%).

The employment-to-population ratio continued its record-breaking streak, nudging slightly higher in June after reaching a new high in May, staying steady at 64.5%. The participation rate only slightly decreased from its historic high in May, from 66.9% to 66.8%, resulting in a solid labour force growth of 21.8k in June. Coupled with strong employment growth, the unemployment rate remained near 50-year lows, at 3.5%. In fact, June’s unemployment rate is second-lowest in this cycle, just 0.04ppt above the low observed in October 2022.

Other labour market indicators echoed this positive sentiment. The underemployment rate, which measures those employed but wishing to work more hours, stayed at 6.4% in June. The underutilisation rate, a combination of unemployment and underemployment, slightly decreased to 9.9%.

Notably, the unemployment rate in NSW dropped 0.1ppt to a record low of 2.9%. Other states also saw declines, including Qld (-0.3ppt to 3.6%), WA (-0.1ppt to 3.6%), and Tas (-0.7ppt to 3.5%). Meanwhile, the unemployment rate remained steady in Vic (3.7%) and slightly increased in SA (+0.2ppt to 4.2%).

In summary, the June Labour Force Survey presented another robust snapshot of the labour market. The survey’s tone aligns with our view of the labour market, expecting the unemployment rate to rise to only 4.0% by year’s end given the near-term resilience of labour demand and strong growth in labour supply.