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Surprising surge: 55,000 new jobs in October, but unemployment rate rises

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2023-11-16

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Temporary jobs for The Voice referendum in October might have played a part, but that doesn't fully explain the unexpected jump of 55,000 new jobs last month.

This increase was more than six times the nearly 8,000 new jobs in September when that figure and a couple of other data points suggested the job market might have cooled a little.

However, the Australian Bureau of Statistics's October Labour Force report also revealed the seasonally adjusted jobless rate rose to 3.7% from 3.5% (revised from 3.6% in the original report) as 27,900 more people joined the workforce to look for work, pushing the unemployment pool to nearly 548,000.

This was almost half the rise of 64,000 people in the size of the unemployment pool in the past year, but new jobs were up 3%, or 419,000 people.

It was a much stronger result than forecast and was the 4th example this year of a weak month for new jobs followed by a sharper rebound in the following month with far more new positions reported.

The ABS said 17,000 of the new jobs last month were full-time positions, with the participation rate rising to an equal all-time high of 67%, while the employment-to-population rate edged up 0.1% to 64.5%.

Hours worked rose by 9 million after falling by 8 million in September.

Bjorn Jarvis, ABS head of labor statistics, said the rise in the jobless rate to 3.7% took it back to around where it had been in July and August.

“The large increase in employment in October followed a small increase in September of around 8,000 people. Looking over the past two months, these increases equate to average employment growth of around 31,000 people a month, which is slightly lower than the average growth of 35,000 people a month since October 2022.”

The underemployment rate remained at 6.3% in October, in line with the updated figure for September. While this was 0.4 percentage points higher than October 2022, this was still around 2.4 percentage points lower than before the pandemic.

The underutilisation rate, which combines the unemployment and underemployment rates, rose 0.1 percentage point to 10.0%. This was 0.7 percentage points higher than last October, but 3.9 percentage points lower than March 2020.

The better than expected labor force report came a day after the better than expected Wage Price Index (WPI) data was published for the September quarter.

The WPI Wage for the September quarter showed a rise of 1.3% - the ABS said that was the largest quarterly rise recorded in the 26 years the WPI has been measured. Over the 12 months, it jumped to 4% from 3.6% in the year to June.

With the Consumer Price Index rising 1.2% in the same period on a headline basis, there was the smallest of rises in wages in real terms, though they remain more than 5% behind inflation in the past five years.

Annually, seasonally adjusted private sector wages growth was higher than the public sector (4.2% compared to 3.5%). The ABS said this was the highest annual growth for the private sector since the December quarter of 2008 and for the public sector since June 2011.

There are a series of explanations for this big jump from the 3.6% annual rate in the three months to June and in 2022-23, and the 0.8% quarter on quarter rise.

These explanations have been known for a while - even the Reserve Bank mentioned them in its final Statement on Monetary Policy for the year earlier this month.

As Michelle Marquardt, ABS head of prices statistics, explained in Wednesday’s release: “A combination of factors led to widespread increases in average hourly wages this quarter.

"In the private sector, higher growth was mainly driven by the Fair Work Commission’s annual wage decision, the application of the Aged Care Work Value case, labor market pressure, and CPI rises being factored into wage and salary review decisions.

"The public sector was affected by the removal of state wage caps and new enterprise agreements coming into effect following the finalisation of various bargaining rounds.”

And contrary to previous quarters, wage growth in the quarter occurred across each of the different methods that set pay.

Once again, she said jobs paid by individual arrangements were the main driver of wage growth (that’s been happening since late 2020), but award and enterprise agreement jobs also contributed more to wages growth than historically seen in a September quarter.

“Many public sector jobs were affected by the ending of state wage caps and the resolution of wage negotiations. This resulted in initial or backdated increases being paid for jobs covered by the newly approved enterprise agreements.” Ms. Marquardt said.

She also pointed out that there are two elements that drive increases in the WPI - the proportion of jobs that have a wage increase and the size of the increases received.

“In original terms, across all public and private sector jobs that had a wage movement in the September quarter, the average change was a 5.4 per cent increase, up from 4.0 per cent in September quarter 2022.

The growth was mostly driven by increases to wages in the private sector. Almost half (49 per cent) of all private sector jobs recorded a movement with the average increase being around 5.8 per cent. This compared to the public sector where 34 per cent of jobs recorded an average pay rise of 3.3 per cent,” Ms. Marquardt said.

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