We have updated our comprehensive chartpack on labour markets in Australia and New Zealand.
In our previous two Compendiums we characterised the Australian labour market as being at a crossroad.
On the one hand it was becoming clearer that demand growth was strengthening and firms were reporting tighter capacity in the economy. In contrast, there were signs that the composition of employment growth had shifted away from being largely dependent on hiring in non-market industries, potentially creating an ‘air pocket’ in jobs growth.
Fast forward and the unemployment rate fell to just 4.1% in December and stayed there in January.
The bigger picture hasn’t changed.
Labour market conditions remain relatively tight, though we expect part of the recent decline in the jobless rate to unwind in coming months.
The recent decline in the unemployment rate has coincided with rising job advertising and a continuation of a high share of firms reporting that labour is difficult to find.
But employment growth has slowed and the share of working-age people in work in Australia has steadily declined over the past year.
As is often the case, the labour force participation rate has declined alongside falling employment propensity.
Much of the decline in labour force participation over the past 6-12 months has been accounted for by age groups 45+ years old. This may be consistent with many firms keeping a keen eye on labour cost growth and cutting - or hiring fewer - older, more expensive staff.
