Labor force data for April 2024 released last month showed that Australia's labor market has begun to weaken in the face of fiscal austerity (the government on Tuesday announced a second consecutive annual fiscal surplus) and 11 interest rate hikes since May 2022. Today (May 16, 2024), the Australian Bureau of Statistics released the latest data – Australian workforce – April 2024 This suggests there are mixed signals, making it difficult to say definitively where things are or where they are headed. Total employment growth is positive and the participation rate is rising, which usually indicates a strengthening labor market. But full-time employment fell, while monthly working hours remained unchanged. In addition, both the unemployment rate and the underemployment rate increased, indicating a weakening economy, although rising participation rates were partly responsible for the rise in unemployment. Furthermore, there are currently 10.8% of the working-age population (1.58 million people) who are able and willing but cannot find adequate work – either unemployed or underemployed, and this proportion is increasing. While mainstream commentators claim Australia is not close to full employment, it is difficult to describe it as a “tight” labor market.
Released in ABS Media – Unemployment rate rises to 4.1% in April, participation rate rises – ABS states:
The seasonally adjusted unemployment rate rose 0.2 percentage points to 4.1% in April, up from a revised 3.9% in March…
The number of employed people increased by about 38,000, the number of unemployed people increased by 30,000, the unemployment rate rose to 4.1%, and the participation rate rose to 66.7%. …
The unemployment rate rose by 30,000, reflecting more people who were out of work and looking for work, as well as more people than usual who said they were waiting to start work…
The employment-to-population ratio remained stable at 64.0% in April, indicating that recent employment growth has roughly kept pace with population growth.
General conclusion:
1. Mixed news – Employment growth resumed despite declines in full-time employment and steady work hours.
2. The participation rate is rising, which means that in addition to the increase in the proportion of working-age people who need to work, employment growth must also respond to potential population growth.
3. The unemployment rate continues to rise.
4. In addition, the underemployment rate increased, and the overall utilization rate increased by 0.4 percentage points to 10.7%, which is an indicator of economic weakness.
Employment increased by 38,500 in April 2024 (0.3%)
1. The number of full-time employees decreased by 6,100 people, while the number of part-time employees increased by 44,600 people.
2. The employment-to-population ratio held steady at 64.0% – a reliable indicator that the labor market is treading water.
The chart below shows the month-over-month growth in total employment, full-time employment and part-time employment over the 24 months to April 2024, using seasonally adjusted data.
The table below provides an accounting summary Labor market performance over the past six months Provides a longer-term perspective, smoothing out month-to-month variations and better assessing trends.
Given changes in labor estimates, it is sometimes useful to check labor force estimates Employment-to-population ratio (%) Because the underlying population estimate (the denominator) is less cyclical and easier to change than the labor force estimate. This is another measure of how robust economic activity is to the unemployment rate, which is sensitive to labor fluctuations.
The chart below shows the employment-to-population ratio since April 2008, the time of the global financial crisis.
The employment-to-population ratio remains stable, fluctuating slightly around current levels.
The chart below shows average monthly employment changes over the calendar years from 1980 to 2024.
1. The average employment change in 2020 was -10,600, rising to 36,300 in 2021 as lockdown eased.
2. In 2022, the average monthly change will be 44,700, and in 2023, the average monthly change will be 31,000.
3. Since 2024, the average monthly change has been 40,600.
The chart below shows the average monthly change in full-time and part-time employment since 1980 (in thousands).
No change in total monthly hours worked in April 2024
Working hours have not changed.
The chart below shows monthly growth (in percent) over the past 48 months (omitting the period of pandemic restrictions).
The dark linear line is a simple regression trend of monthly changes.
Unemployment rate increased by 30,300 to 604,200 in April 2024
Typically, rising unemployment rates associated with positive employment growth and rising participation rates are seen as indicators of an improving labor market.
Rising participation rates often indicate increased confidence as job opportunities expand and the implicitly unemployed decide to return to the job search process.
It's too early to tell whether that will be the case this time.
As I noted above, we have mixed signals.
The chart below shows the national unemployment rate from April 1980 to April 2024.
In April 2024, the generalized labor underutilization rate increased by 0.4 percentage points to 10.7%
1. The underemployment rate increased by 0.1 percentage points to 6.6% (+27,200).
2. There are a total of 984,500 underemployed workers.
3. The labor underutilization rate (unemployment rate plus underemployment) increased by 0.4 percentage points to 10.7%.
4. The total number of unemployed or underemployed workers is 1.5887 million.
The fact that 10.7% of workers who are both able and willing to work are in some way out of work (unemployed or underemployed) has led economic commentators and policy officials to claim that Australia is close to full employment or that this is a tension labor market.
The chart below plots Australia's seasonally adjusted underemployment rate between April 1980 and April 2024 (blue line) and the overall underutilization rate for the same period (green line).
The difference between the two lines is the unemployment rate.
Teen labor market to see fewer full-time jobs in April 2024
The overall number of youth employment increased by 5,200, but the number of full-time employees decreased by 4,700 and the number of part-time employees decreased by 9,900.
The table below shows the distribution of net job creation by full-time/part-time status and age/gender category (15-19 and other) last month and the last 12 months.
To put youth employment into a scale (relative to their size in the population), the chart below shows the employment-to-population ratio for men, women and the total population aged 15-19 since July 2008.
You can interpret this graph as describing changes in employment relative to the underlying population for each cohort.
Judging from recent developments:
1. The proportion of males increased by 0.3 percentage points from the previous month.
2. The proportion of women increased by 0.1 percentage points from the previous month.
3. The overall youth employment-to-population ratio increased by 0.2 percentage points from the previous month.
in conclusion
My standard monthly caveat: Given the way labor force surveys are constructed and administered, we always have to be cautious in interpreting monthly changes.
My overall rating is:
1. The signals are mixed, making it difficult to tell clearly the current status or development direction of things.
2. Total employment growth is positive and the participation rate is rising, which usually indicates that the labor market is strengthening.
3. However, the number of full-time employees fell and monthly working hours remained unchanged.
4. In addition, both the unemployment rate and the underemployment rate increased, indicating a weakening economy, although rising participation rates were partly responsible for the rise in unemployment.
5. In addition, there are currently 10.8% of the working-age population (1.58 million people) who are able and willing but cannot find adequate work – either unemployed or underemployed, and this proportion is increasing.
7. Although mainstream commentators claim that Australia is not close to full employment, it is difficult to describe it as a “tight” labor market.
My new book is now available for pre-order
A new book I co-authored with Warren Mosler is in the final stages of completion.
The book is titled: Modern Monetary Theory: The Excellent Adventures of Bill and Warren.
The content description is:
In this book, William Mitchell and Warren Mosler, original proponents of Modern Monetary Theory (MMT), discuss their views on how MMT has evolved over the past 30 years.
In a delightful, entertaining, and informative way, Bill and Warren recall how they came together from very different backgrounds to develop Modern Monetary Theory. They consider the history and personality of the MMT community, including anecdotal discussions of various scholars engaged in MMT and those who have strayed from MMT's core logic.
This is a much needed book that provides readers with a basic understanding of the original logic behind the MMT Money Story, including the role of mandatory taxation, the origins of unemployment, the origins of the price level, and the need for job security As the essence of a progressive society—the essence of Bill and Warren’s brilliant adventure.
The introduction is written by British scholar Phil Armstrong.
You can find out more about this book from the publisher’s page – here.
The book will be published on 15 July 2024, but you can pre-order a copy by emailing: info@lolabooks.eu
The special pre-order price is €14.00 (incl. VAT).
That's enough for today!
(c) Copyright 2024 William Mitchell. all rights reserved.
