The Australian unemployment rate took a dip in September to 5.6 per cent off of the revised August rate of 5.7 per cent.
This decline, however, masks some concerns across the job market given that we saw an overall loss of 9,800 jobs in the economy on the back of an upwardly revised loss of 8,600 jobs in August. Full-time jobs lost in September were 53,000, the largest loss since April 2011 with part time roles contributing to only 43,200 new jobs.
Therefore the decline in the overall unemployment rate can only be attributed to a reduction in job seeker confidence, with fewer jobs seekers in the market actively looking for work and a decline in the participation rate from 64.7 per cent to 64.5 per cent.
Perhaps equally worrying is that the underemployment rate is now 8.7 per cent, the highest level since the ABS began tracking it.
“There are now 130,000 more persons working part time than in December 2015, while the number working full time has decreased by 54,100 persons,” said ABS program manager, Labour and Income Branch, Jacqui Jones.
Whilst many economists continue to remain concerned about the volatility of the labour force numbers and the validity of the methodology used by the ABS to calculate them, the trends would seem to indicate reasons to be concerned, or to at least delve deeper rather than taking the “headline numbers” at face value.
Are the increases in part-time work an indication that the employment market is improving, as some suggest and that many employers are increasingly using temporary staff to supplement exiting workforces while they continue to assess demand? Or is it a sign of a reduction in demand and employers reducing staff hours rather than laying them off? Determining which of these scenarios is correct is difficult given the Australian Bureau of Statistics only measures hours worked when determining full-time and part-time employment, not the nature of the employment contract between worker and employer.
We continue to see reasonable levels of demand for workers in the construction sector. A recent Manpower Group Talent Shortage Survey showed that 38 per cent of companies across Australia reported difficulties filling vacancies due to talent shortages this year, with skilled trades and engineers topping the list. But it is also difficult to determine the strength of the future jobs market just using recruitment and job advertising data as this is generally is also influenced by current demand rather than necessarily long term demand. So is the forecast for jobs sunshine or bad weather in the future? Well, that depends on who you ask.
The Ai Groups Performance in Construction Index (PCI) shows a rise of 4.8 points in September to 51.4, the third time in four months that activity levels have improved. The index showed engineering construction continued to expand thanks mainly to an increase in non-mining infrastructure construction, particularly in roads and rail projects in New South Wales and Victoria. However, commercial construction fell backwards in the index while house building activity also contracted along, with weaker activity in the apartment sector also seeing a slight index contraction for the month.
Australia’s property and construction executives are also more confident with the ANZ/Property Council Survey showing an overall rise in confidence with the exception of Queensland and South Australia. In that survey, 29 per cent of respondents suggested they expected the property sector to continue to improve over the next 12 months. This marked an increase from 27 per cent in the previous quarter.
It seems, however, that this expectation of growth is more positive in the commercial sector, including tourism and health, and Victoria and New South Wales set to continue to lead the way. The CommSec State of States Report showed overall construction work in Queensland was 19 per cent below the 10-year average, indicating more still needs to be done to stimulate construction jobs in Australia’s third largest state.
In the residential sector, things also appear to look more gloomy for job seekers. US investment bank Morgan Stanley suggested that despite the current boom in the construction sector, they expect the see a slowdown in the housing sector, with the current glut of apartments placing up to 200,000 jobs in this sector of the industry at risk in the future. If this is true, it will have dramatic impact on jobs in Victoria and New South Wales.
So in summary, the national jobs forecast for the construction sector over the next 12 months would seem to indicate a high chance of storms across the housing and apartment sector, clouds with a chance of rain in commercial and sunshine in infrastructure, particularly in New South Wales and Victoria.