Jobless rate to fall despite payrolls dip

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Economists are still confident of a further drop in the unemployment rate and a relatively solid rise in employment when the December labour force figures are released on Thursday

That’s despite new data on Wednesday showing a small dip in payroll jobs and a modest fall in job advertising in the month.

The Australian Bureau of Statistics said payroll jobs fell 0.5 per cent in the fortnight to December 18, but were still 2.9 per cent higher than in December 2020.

ABS head of labour statistics Bjorn Jarvis said the first half of December is usually a seasonal peak for jobs each year, followed by a fall around the summer school holidays.

National Australia Bank economist Taylor Nugent said there was nothing in the report to shift expectations of a strong result in Thursday’s full labour force report for December.

“With payrolls near record highs the economy is clearly performing much better than what the (Reserve Bank of Australia) had thought back in November,” he said.

Economists expect Thursday’s labour force report will show employment increased by 60,000 in December after November’s 366,100 surge which followed the end of Delta variant lockdowns in NSW, Victoria and the ACT.

They expect the jobless rate to ease from 4.6 per cent to 4.5 per cent, a level briefly seen last August before the Delta restrictions were put in place.

In its most recent forecasts in November, the RBA had predicted an unemployment rate of 4.75 per cent by the end of 2021.

The National Skills Commission also released its final vacancy report for December, confirming its preliminary findings of a 2.5 per cent decline in online job advertisements in the month, although they were still 37.4 per cent higher than a year earlier.

The latest Westpac-Melbourne Institute sentiment survey found 55 per cent of respondents expect mortgage interest rates to rise over the next 12 months, compared with 41 per cent when asked in August and 36 per cent a year ago.

Still, its overall sentiment index eased just two per cent in January despite the impact of the Omicron outbreak that is causing a further disruption to the economy.

“This is a surprisingly solid result,” Westpac chief economist Bill Evans said.

It compares to the 5.2 per cent drop seen in the first month of the Delta outbreak in NSW, a 6.1 per cent drop heading into Victoria’s “second wave” outbreak in 2020, and the epic 17.7 per cent collapse when the pandemic first hit in early 2020.

The result came in contrast to the weekly confidence survey compiled by the ANZ and Roy Morgan which has seen a sharp drop in the past two weeks.

A separate survey conducted by employment specialist Robert Half also found almost three-quarters of bosses are confident about their growth prospects in 2022 compared to 2021.

While the survey was undertaken in November and December, and prior to Omicron being felt, Robert Half director Nicole Gorton said the past two years of COVID-related disruption have strengthened businesses’ organisational agility and adaptability.

“Australian businesses are generally well prepared to weather the latest COVID outbreak while continuing to pursue their strategic priorities for the year,” she told AAP.

Four out of five of the 300 hiring managers polled, including chief financial officers and chief information officers, intend to hire permanent staff this year, although half expect this to be more challenging than it was prior to the pandemic.

“Even with the gradual return of international migration this year, the shortfall of skilled talent entering the market over the past two years will take at least the same amount of time to recover, if not more,” Ms Gorton said.

 

Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)

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