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Week Economic Report

Published 24/09/2018, 08:58 am

AUSTRALIAN ECONOMIC DEVELOPMENTS

Labour market data released by the ABS this week provides a detailed snapshot of Australian employment as of August 2018. Across industries, job gains over the year to August 2018 were strongest in the manufacturing sector, with national manufacturing employment rising to its highest level since 2010. Employment growth is also strong in public administration and professional services.In the three months to August,casual work declined slightly, in absolute numbers and as a proportion of the workforce. Casual work accounts for 20.6% of the total workforce, which is about the same proportion of workers as it has been for the past two decades.Leading indicators of labour demand suggest jobs growth will continue into 2019, particularly for higher skilled and professional roles. The Department of Jobs and Small Business’ Internet Vacancy Index rose by 0.6% m/m and 4.5% p.a.to 183,100online job vacancies in August (trend).

Australian growth in economic activity and employment continues to be strongly supported by population growth. The ABS’ latest estimates of Australia’s residential population for the March quarter of 2018, indicate population growth of 1.6% p.a., which is around the recent annual average (1.6%p.a. from 2005 to 2017). Net overseas migration continues to be the main driver of population growth in Australia, as it has been for many decades.

Employment growth strongest in industrials and construction in August

The latest ABS labour force estimates show employment expanded in 9 of the 19 major industry sectors in the three months to August 2018. Employment growth over the year to August 2018 was spread more broadly, with 12 of the 19 industry sectors indicating growth (chart 1and table 1). The sectors with the largest increases over the year to August2018 were manufacturing (+93,100), public administration (+75,300) and professional services (+62,900), while the largest falls were in education (-10,000), retail trade (-13,200), and personal & other services (-23,300).

Reflecting the trends in Ai Group’s Australian Performance of Services Index(Australian PSI®)in recent months, employment growth has increased in most business service industries(such as professional services, finance, property & real estate, I.T. & telecommunications)over the past year, particularly within the professional services industry.Most of the increase in professional services employment over the past year was in ‘computer system design and related services’. Employment in this industry has almost doubled in the last decade rising from 141,500 in August 2008 to 281,500 in August 2018 (unadjusted data) (see chart 2).

Construction industry jobs are also booming, with a further 36,300 jobs added in the year to August 2018 (see chart 1 and table 1). Employment in the ‘heavy and civil engineering construction segment’ has almost doubled since 2016, rising from 65,800 in August 2016 to 120,700 in August 2018 (unadjusted data). Construction is now estimated to be around its highest share of employment in a century, directly employing 1.2 million people or 9.5% of the workforce. This is due to significant rises in infrastructure spending and especially transport projects along the east coast has driven up heavy & civil engineering employment. The pipeline of work to be completed remains large, with this year’s federal budget adding $25bnin road and rail projects.

Employment growth by industry

Employment in computer system design

Key labour force numbers

Manufacturing employment continues recover in 2018

2018 has seen a welcome recovery in manufacturing employment. In contrast to the declines seen over much of the past decade, manufacturing employment was the largest contributing industry to employment growth over the year to August, rising by 10.5% p.a. to 978,000, its highest level since November 2010(trend). Total manufacturing employment now accounts for 7.7% of all employment. On a quarterly basis, manufacturing experienced the second largest increase in employment of all sectors, up by 30,500 in the quarter to August 2018.

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