The Australian Bureau of Statistics (ABS) released its latest labor force data today (16 February 2023) – Australian workforce – January 2023. My overall assessment is that the labor market is now slipping after two straight months of unemployment. In January 2023, total employment decreased by 11,500 (-0.1%), with full-time employment decreasing by 43,300 and part-time employment increasing by 31,800. The participation rate also fell further to 66.5%, and we saw a significant increase in the unemployment rate (+21,900). Workers are being squeezed by two forces: Demand for labor is falling due to easing border restrictions and rising immigration, while supply is rising. The underlying (“hypothetical”) unemployment rate was closer to 5.6%, rather than the official rate of 3.7%, suggesting that the labor market remains weak. There are still 1.398 million Australian workers who are unemployed in some way (officially unemployed or underemployed). Overall, the RBA’s strategy of deliberately forcing workers out of work and depriving them of income is working. shameful!
A summary of the ABS labor force (seasonally adjusted) estimates for January 2022 is:
- Employment fell by 11,500 (-0.1%) – full-time employment fell by 43,300 and part-time employment rose by 31,800.
- The number of unemployed rose by 21,900 to 523,500.
- The official unemployment rate rose 0.2 percentage points to 3.7%.
- The participation rate fell 0.1 percentage point to 66.5%.
- The employment-to-population ratio fell 0.2 percentage points to 64.0%.
- Monthly total hours decreased by 40 million hours (-2.1%).
- The underemployment rate rose 0.1 percentage point to 6.1% (an increase of 9,400). Overall, there are 874,800 underemployed workers. The total labor force underutilization rate (unemployed plus underemployment) rose 0.2 percentage point to 9.8%. A total of 1.398 million people were unemployed or underemployed.
In its– media release – The ABS states:
… The unemployment rate rose to 3.7% as the number of employed persons fell by about 11,000 and the number of unemployed rose by 22,000.
It was the second straight monthly decline in seasonally adjusted employment, but a very strong gain in 2022. …
The underutilization rate, which combines the unemployment and underemployment rates, rose 0.2 percentage points to a seasonally adjusted 9.8 percent.
Bottom Line: Job growth has now fallen for the second straight month, suggesting the economy is slowing, cutting jobs and forcing workers out of work.
Unfortunately, the RBA plans to deliberately increase unemployment, thereby depriving people of income, and spending power comes into play.
Employment falls by 11,500 in January 2022 (-0.1%)
1. Full-time employment decreased by 43,300, while part-time employment increased by 31,800.
2. The employment-to-population ratio decreased by 0.3 percentage points to 64.0%.
The chart below shows the monthly growth in full-time (blue bars), part-time (gray bars) and total employment (green line) for the 24 months ending January 2022, using seasonally adjusted data.
I took observations from September 2021 to January 2021 – they were outliers due to the Covid wave at that time.
The table below provides an accounting summary Labor market performance over the past six months Provides a longer-term perspective, breaking through monthly changes and better assessing trends.
Given changes in workforce estimates, sometimes check Employment Population Ratio (%) Because the underlying population estimate (the denominator) is less cyclical and subject to change than the labor force estimate. This is another measure of the robustness of economic activity to the unemployment rate, which is sensitive to fluctuations in the labor force.
The graph below shows the employment-to-population ratio since January 2008 (ie since the global financial crisis).
In January 2022, the ratio fell 0.2 percentage points to 64%.
For perspective, the chart below shows the average monthly employment change over the calendar years from 1980 to 2022 (so far).
1. Average employment change of -880 in 2020, increasing to 36,000 in 2021 as lockdown measures eased.
3. The average monthly change in 2022 is 37,700.
The graph below shows the average monthly change (in thousands) of full-time and part-time employment (bottom graph) since 1980.
40 million fewer hours worked (-2.1%) in January 2022
The chart below shows the monthly growth (in percent) over the last 24 months.
The dark linear line is the simple regression trend for monthly variation (sloped upward by the two outlier results).
The reality is that there hasn’t been much growth in hours worked over the past 9 months and the last three months have been negative.
Actual and Trend Employment
The Australian labor market is now larger than it was in February 2020, with employment now close to returning to pre-pandemic trends.
But it’s still below where it would be if the trend holds.
The graph below shows total employment (blue line) and what it would have been if growth had continued at the average rate from 2015 to April 2020.
The job vacancies increased by 45,500 to 99,900 in January 2023.
Population slowdown – “what-if” unemployment analysis
The graph below shows Australia’s working-age population (15+) from January 2015 to January 2022. The dashed line is projected growth if the pre-pandemic trend continues.
The difference between the two lines is that the working-age population fell after Covid immigration restrictions.
The civilian population in January 2023 is 368,700 fewer than if pre-Covid trends continued.
The chart below shows the evolution of the real unemployment rate since January 1980 to January 2022, the dashed line is the “assumed” rate assuming the most recent peak participation rate (recorded in November 2022 = 66.8%), extrapolated labor Age population (based on growth rates from 2015 to February 2020) and actual employment since February 2020.
It shows what the unemployment rate would be given real job growth if the trajectory of the working-age population followed past trends.
In this blog post – Australia’s external border closure cut unemployment by around 2.7 percentage points (April 28, 2022), I provide a detailed analysis of how I calculated the “hypothetical” unemployment rate.
Therefore, taking into account employment performance since the pandemic, the unemployment rate in January 2023 would be 5.6%, rather than the current 3.7%.
The finding skews sharply different from what has happened since the pandemic began.
Unemployment rises by 21,900 to 523,500 in January 2022
It was the second straight month that the unemployment rate rose, marking a turning point in labor market conditions.
Unemployment rose as the net decline in employment (-11,500 thousand) was exacerbated by an increase in the labor force (10,400 thousand) as an increase in the working-age population more than offset the 0.1 decline in the participation rate.
So the worst-case scenario is on the horizon – the potential working-age population is growing rapidly again thanks to immigration, while job opportunities are falling, meaning falling demand and rising supply will force unemployment up.
Again, keep in mind the “what-if” analysis above, and look at the impact of declining engagement below.
The graph below shows the national unemployment rate from January 1980 to January 2023. Longer time series help to form some perspective on what is happening now.
The broad labor underutilization rate rose 0.2 percentage points to 9.8% in January 2022
1. The underemployment rate increased by 0.1 percentage point to 6.1% (an increase of 9.4 thousand).
2. The total number of underemployed workers is 874,800.
3. The total labor force underutilization rate (unemployed plus underemployment) increased by 0.2 percentage points to 9.8%.
4. A total of 1.398 million people were unemployed or underemployed.
Unemployment and underemployment are both rising — a bad sign — as full-time employment has fallen sharply.
The graph below plots Australia’s seasonally adjusted underemployment rate (blue line) from April 1980 to January 2022 and the broad underemployment rate (green line) for the same period.
The difference between the two lines is the unemployment rate.
In January 2022, the teenage labor market deteriorated again
The table below shows the distribution of net employment by full-time/part-time status and age/gender category (15-19 and others) for the past month and the past 12 months.
To put teen employment in context of size (relative to their size in the population), the graph below shows the employment-to-population ratios since June 2008 for males, females, and the total population ages 15-19.
You can interpret this graph as describing the change in employment relative to each cohort’s underlying population.
Judging from recent developments:
1. The proportion of males increased by 0.2 percentage points month-on-month.
2. The proportion of women decreased by 0.9 percentage points.
3. The overall youth employment-to-population ratio decreased by 0.3 percentage points.
4. This continues to reverse the recent trend of female adolescents outperforming male adolescents.
in conclusion
My standard monthly caveat: Given the way labor force surveys are constructed and conducted, we always have to interpret monthly movements with caution.
My overall rating is:
1. My overall assessment is that the labor market is declining after two straight months of unemployment.
2. In January 2023, total employment decreased by 11,500 (-0.1%), of which full-time employment decreased by 43,300 and part-time employment increased by 31,800.
3. The participation rate also fell further to 66.5%, and the unemployment rate rose significantly (+21,900).
4. The labor force is being squeezed by two forces: As border restrictions ease and immigration increases, labor demand falls while supply rises.
5. The underlying (“hypothetical”) unemployment rate is closer to 5.6%, rather than the official unemployment rate of 3.7%, suggesting that the labor market remains weak.
6. There are still 1.398 million Australian workers who are unemployed in some way (officially unemployed or underemployed).
7. Overall, the RBA’s strategy of deliberately forcing workers out of work and depriving them of income is working. shameful!
Enough for today!
(c) Copyright 2023 William Mitchell. all rights reserved.
