AUSTRALIAN ECONOMIC DEVELOPMENTS
Australia’s labour market continues to expand strongly in 2018. Jobs growth seems to be stronger than had been anticipated by the RBA, Government and financial markets, as does recent growth in labour market participation. The ABS estimates that the national unemployment rate held steady at 5.0% in October 2018, its lowest point in six and a half years (seasonally adjusted). Total employment increased by 32,800 people in the month of October and 308,100 over the year to October.Most of this jobs growth has been full-time and has been in NSW and Victoria. These states now have the tightest labour markets amongst the states, with strong employment growth and unemployment at decade lows.
Even more positively, the national youth unemployment rate (those aged 15-24 years) fell to 11.2% in October 2018 from a recent peak of 14.1% in November 2014(trend). This was the lowest youth unemployment rate since 2011.The reduction in spare labour capacity (i.e. lower unemployment and underemployment) across the economy is now contributing to a gradual acceleration in wages.National wage growth (as measured by the ABS Wage Price Index) accelerated to 2.3% p.a.in the September quarter of 2018 (Q3), up from 2.1% p.a. in Q2 of 2018 and the fastest annual growth rate since Q3 2015.
Headline inflation was just 1.9% p.a. in Q3 2018, so average wages are growing in real terms across most large industries. Average wages are also (gradually) becoming more equitable. This week the Workplace Gender Equality Agency (WGEA) found Australia’s national gender pay gap has shrunk over the past five years,as more employers have acted to address gender pay gaps within their own businesses. More work is needed to close the gap however; in 2017-18,average full-time pay including bonuses was 21.3% more for men than for women–equivalent to $25,717per year.
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