Unemployment rises for the first time in 10 months despite continuing jobs boom

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Australia’s unemployment rate has ticked up to 3.5 per cent in August, from 3.4 per cent the month before.

It is the first time in 10 months, since October 2021, that the unemployment rate has increased.

However, the increase was basically a reversal of the factors that saw unemployment fall from 3.5 to 3.4 per cent in July, despite the loss of more than 40,000 jobs that month.

In August, the Australian Bureau of Statistics estimated 33,500 jobs were added to the economy and the jobless rate rose only because of an increase in the number of people looking for work.

Amol Malla recently moved jobs to take up a new computer vision software engineer position at DroneShield, a company that has doubled its workforce over the past two years to around 50 in Australia and 10 in the US.

“Towards the beginning of the year, I was getting a few calls from recruiters and I realised there is a bit of a demand for my work in the market,” he said.

“I started looking for opportunities that had better work environment and pay.”

Mr Malla said he did receive a slight pay rise as well as some stock options by moving job to DroneShield, but he feels the market for his skill set is cooling from red hot levels.

“There’s still a bit of demand, but the employers are becoming quite a lot more selective about who they hire.”

Separate ABS figures released yesterday showed that the proportion of workers shifting jobs had reached a decade high, while the number of job vacancies exceeded the number of unemployed for the first time on record.

There are plenty of vacancies across large parts of the booming mining sector.

Murray Leahy, the managing director of MLG OZ, oversees a company with around 700 staff and another 230 contractors who operate 170 trucks and hundreds of other pieces of mining-related equipment.

“We have large capital investment, we have a customer base that’s wanting more and really, the two big bottlenecks for us are people to be able to operate the equipment, and somewhere to house them,” he said.

“We’ve got enough employment to be able to put 200 on quite comfortably.”

Participation rises, COVID effects drag on

The unemployment rate only ticked higher because more Australians started looking for work.

The participation rate bounced back from a steep drop in July to return to 66.6 per cent last month, which is just below the record high set in June.

KPMG’s chief economist Dr Brendan Rynne said there are a range of reasons why so many people are looking for work.

“Some seasonal (sickness, holidays), but also some structural (cost of living increases and interest rate rises resulting in additional working-age population looking for employment to offset rising household cost pressures),” he wrote in a note on the data.

ANZ’s senior economist Catherine Birch said some of the same factors were pushing many people into multiple jobs.

“It’s easier for people to find that additional job who aren’t getting enough hours in their current job,” she told The Business.

“But it also may be some bad factors, or some push factors, where the rising cost of living, falling real wages and rising rates are actually pushing people to find additional jobs to be able to cover their expenses.”

Hours worked also bounced back last month due to the absence of school holidays, although sickness continued to take a toll on workplaces.

“COVID-19 and other illness-related worker absences continued to be reflected in hours worked in August,” noted ABS head of labour statistics Lauren Ford.

“The number of people working reduced hours due to being sick remained elevated in August, at around 760,000 people. This is around double the number we typically see at the end of winter.”

Low jobless rate ‘won’t persist forever’

AMP senior economist Diana Mousina said that a fall in underemployment meant that the underutilisation rate remained unchanged at 9.4 per cent — its lowest level since 1982.

“The strength in employment growth won’t persist forever,” she noted.

“Some leading indicators of employment growth, like job vacancies, have started to soften (albeit slightly), but from very high levels.”

Ms Mousina still expects the unemployment rate to fall a little lower from here to trough at 3.2 per cent.

That is in line with the RBA’s forecast for unemployment to fall to a low of 3.25 per cent by the end of this year before starting to edge higher in 2023.

However, Commonwealth Bank economist Stephen Wu said there are signs that labour demand has peaked at the same time as the supply of workers is beginning to increase.

“Recruitment activity as measured by both the government’s Internet Vacancy Index and ANZ job ads has broadly tracked sideways over recent months,” he noted.

“The labour account data includes short-term non-resident workers (e.g. backpackers or international students) that are outside the scope of the labour force survey.

“These workers numbered around 33,000 in the second quarter of 2022, up from essentially zero over 2021 but well below the roughly 130,000 figure prior to the pandemic.

“That number will swell from here.”

As Mr Wu observed, and his colleagues at CBA have previously noted, these short-term migrants with working rights are not counted in the monthly employment numbers, even though they add to the numbers of workers available for hire.

There are businesses actively trying to speed up the return of international workers to deal with the skill shortages many employers are complaining about.

WorkinAUS CEO Brian Schroder said his new employment platform launched just three months ago, initially targeted workers from the UK and Ireland.

“Our target audience is unskilled, semi-skilled and skilled labour,” he said.

“That’s across all industry verticals, from hospitality, tourism, IT trades, retail, construction — it’s across the board.”

He said his ultimate aim is “connecting Australian employers with a much larger labour pool that they can get access to.

“Our goal is to be generating about 2,000 applications to our platform by the end of October and for that to increase by about 2,000 a week thereafter.

“So we’re looking for this to ramp up very, very quickly.”

For employers like Murray Leahy, any moves to increase the workforce pool would be welcome.

“For us to be able to attract and retain people has been challenging and getting enough people to deal with their customers growth has been been a real challenge,” he said.

By business reporters Michael Janda and Rachel Pupazzoni (Original ABC Article)