Labour market remains tight over September: ABS

The Australian Bureau of Statistics’ (ABS) Labour Force data for September 2023 has revealed that the unemployment rate fell slightly by 0.1 per cent to 3.6 per cent in seasonally adjusted terms.

The number of unemployed people decreased by 19,800 (3.7 per cent) to 520,500 between August and September, while the number of people entering the workforce increased to 14,111,200, up by 6,700 (seasonally adjusted).

ABS head of labour statistics Kate Lamb noted that it is “important to remember that a fall in unemployment does not always mean much higher employment”.

“The fall in the unemployment rate in September mainly reflected a higher proportion of people moving from being unemployed to not in the labour force,” Ms Lamb said.

“The participation rate fell 0.2 percentage points to 66.7 per cent from last month’s record high of 67.0 per cent but remained well above levels before the COVID-19 pandemic.”

CreditorWatch chief economist Anneke Thompson said the decrease in unemployment was due to an increase in part-time employment and a fall in full-time employment.

“Overall hours worked actually decreased by 0.1 per cent, and the participation rate also fell from record highs, to 66.7 per cent, supporting our case for another rate hold at the RBA’s November meeting,” Ms Thompson said.

“This data suggests some easing in the tightness of the labour force, and may also reflect lower hours worked in industries that offer more casual hours.”

ANZ head of Australian economics Adam Boyton said these results are “broadly in line” with the Reserve Bank of Australia’s (RBA) expectations, aside from the 3.6 per cent unemployment rate.

“That puts the focus squarely on the CPI next week ahead of what looks to be a live RBA Board meeting in November,” Mr Boyton added.

Commonwealth Bank of Australia (CBA) head of Australian economics Gareth Aird said that slowdown in consumer demand over the past year is “yet to result in any meaningful lift in unemployment” and that the major bank suspects “that labour hoarding is playing a role”.

“Finally, we note that the share of multiple job holders sits at a record high” he said.

“Cost of living pressures, particularly for those who rent or have a mortgage, has likely contributed to more people than otherwise working more than one job.”

Mr Aird added from the perspective of monetary policy, CBA does not believe there is anything in the ABS’s data to “stand in the way of a rate hike at the November Board meeting if the upcoming Q3 23 inflation report is sufficiently strong”.

Westpac associate Ryan Wells noted that the growth in employment during September was “softer than anticipated” compared to Westpac’s and the market’s consensus for a gain of 20,000.

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