Today (December 14, 2023), the Australian Bureau of Statistics released the latest data – Australian workforce – November 2023. Employment growth remained strong, with an unexpected increase in full-time employment. Growth in the labor force outpaced strong changes in employment as the participation rate rose 0.2 percentage points, meaning the unemployment rate rose 0.1 percentage points. If there was no change in the participation rate, the official unemployment rate would be 3.5% rather than the official 3.9%. Underemployment has also risen – 10.4% of the working-age population available and willing to work is being wasted in one way or another – either unemployed or underemployed. While mainstream commentators claim Australia is not close to full employment, it is difficult to describe it as a “tight” labor market.
The ABS November 2023 labor force (seasonally adjusted) estimates are summarized below:
- Employment increased by 61,500 (0.4%) – full-time employment increased by 57,000 and part-time employment increased by 4,500. Part-time jobs account for 30.5% of the total.
- The unemployment rate increased by 18,800 people to 572,000.
- The official unemployment rate rose 0.1 percentage point to 3.9%.
- The participation rate increased by 0.2 percentage points to 67.2%.
- The employment-to-population ratio increased by 0.1 percentage points to 64.6%.
- Total monthly hours worked increased by 8.9 million hours (0.46%) after two months of decline.
- The underemployment rate increased by 0.2 percentage points to 6.5% (+30,200). In total, there are 966,700 underemployed workers. The labor underutilization rate (unemployment rate plus underemployment) increased by 0.3 percentage points to 10.4%. The total number of unemployed or underemployed workers was 1,538,700.
Released in ABS Media – Unemployment rate rose to 3.9% in November – ABS states:
The unemployment rate rose 0.1 percentage points to 3.9% in November…
Both employment and unemployment rates grew strongly in November, with the employment-to-population ratio returning to a record high of 64.6%, and the participation rate hitting a new high of 67.2%…
While working hours have been reduced, the underemployment rate has further increased, with the underemployment rate rising by 0.2 percentage points to 6.5% in November…
The underutilization rate, which combines the unemployment and underemployment rates, rose 0.3 percentage points to 10.4%. This is 1.1 percentage points higher than last November…
Bottom line: Strong job growth and rising participation rates are a good combination.
Employment increased by 61,500 in November 2023 (0.4%)
1. Full-time employment increased by 57,000 people (0.6%), and part-time employment increased by 4,500 people (0.1%).
2. The employment-to-population ratio increased by 0.1 percentage points to 64.6%.
The chart below shows the month-over-month growth in total employment, full-time employment and part-time employment using seasonally adjusted data for the 24 months to November 2023.
The following table 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 January 2008, the time of the global financial crisis.
In November 2023, the ratio increased by 0.1 percentage points to 64.6%.
Despite the RBA's attempts to suppress employment growth, the chart shows that the relationship between employment and the working-age population has been very stable during periods of interest rate increases, and this is a period when population growth is accelerating.
To put things into perspective, the chart below shows average monthly employment changes over the calendar years from 1980 to 2023 (so far).
1. The average employment change in 2020 was -8,900, and as the lockdown eased, the average employment change in 2021 was 36,700.
2. In 2022, the average monthly change will be 44,100.
3. Average change so far in 2023 is 39,700.
The chart below shows the average monthly change in full-time and part-time employment since 1980 (in thousands).
In November 2023, total monthly working hours increased by 800,000 hours (0.04%)
In other words, while full-time employment growth was strong, it was barely there.
The chart below shows monthly growth (in percent) over the past 24 months (omitting the period of pandemic restrictions).
The dark linear line is a simple regression trend of monthly changes.
Unemployment rate increased by 18,800 to 572,000 in November 2023
Despite strong job growth, the unemployment rate rose this month as the participation rate rose – meaning the labor force grew faster than the number of people employed (see analysis below).
This is the second month in a row that we have observed this combination.
The chart below shows the national unemployment rate from January 1980 to November 2023. Longer time series help to develop some perspective on what is happening now.
In November 2023, the overall labor underutilization rate increased by 0.3 percentage points to 10.4%
1. The underemployment rate increased by 0.2 percentage points to 6.5% (+30,200).
2. There are a total of 966,700 underemployed workers.
3. The total labor underutilization rate (unemployment rate plus underemployment) increased by 0.3 percentage points to 10.4%.
4. The total number of unemployed or underemployed workers is 1.5387 million.
This means that 10.4% of available and willing workers are in some way out of work (unemployed or underemployed), which makes a mockery of claims by economic commentators and policy officials that Australia is close to full employment or has a tight workforce. market.
The chart below plots Australia's seasonally adjusted underemployment rate between April 1980 and November 2023 (blue line) and the overall underutilization rate for the same period (green line).
The difference between the two lines is the unemployment rate.
The total participation rate increased by 0.2 percentage points to 67.2% in November 2023
The unemployment rate rose because growth in the labor force (80,200) exceeded employment growth (61,500), as the participation rate rose to 67.2%.
The labor force is the portion of the working-age population (15 years and older). The ratio of the working-age population to the labor force is called the labor force participation rate. Changes in the labor force are therefore likely to affect the official unemployment rate, so changes in the latter need to be interpreted carefully. Rising unemployment may not signal a recession.
The labor force may expand due to overall population growth and/or increases in labor force participation (or vice versa).
The table below shows a breakdown of changes in the main aggregates (labour force, employment and unemployment) and the impact of the decline in the participation rate.
Changes in the labor force in November 2023 are the result of two independent factors:
- Base population growth added 32,300 people to the labor force.The impact of population growth on the total labor force is relatively stable from month to month; and
- The increase in the participation rate means that 48,000 workers have entered the labor market (relative to the case where the participation rate had remained constant).
- The end result was an increase in the labor force of 80,200 people.
Evaluate:
1. If the participation rate does not rise in November 2023, taking current employment levels into account, the total number of unemployed people will be 524,000 rather than the official figure of 572,000 recorded by the ABS, a difference of 48,000 ('participation effect') .
2. Without an increase in the participation rate, the official unemployment rate will be 3.5% (rounded) instead of the current official figure of 3.9%.
Youth labor market improves in November 2023
The overall number of youth employment increased by 11,600, of which full-time employment increased by 3,600 and part-time employment increased by 8,000.
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 men increased by 1 percentage point from the previous month.
2. The proportion of women increased by 0.2 percentage points from the previous month.
3. The overall youth employment-to-population ratio increased by 0.6 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. Employment growth remains strong, with an unexpected increase in full-time employment.
2. The participation rate rose by 0.2 percentage points, and labor force growth outpaced strong employment changes, implying that the unemployment rate rose by 0.1 percentage points.
4. If the participation rate had not changed, the official unemployment rate would have been 3.5%, not 3.9%.
5. Underemployment has also increased – 10.4% of the working-age population available and willing to work is currently wasted in one way or another – either unemployed or underemployed.
6. Although mainstream commentators claim that Australia is not close to full employment, it is difficult to describe it as a “tight” labor market.
That's enough for today!
(c) Copyright 2023 William Mitchell. all rights reserved.
