Economics | November 24 2016
A third of Australian regions at ‘full employment’
Detailed employment data
 Full employment? Thirty-two of the 87 Australian labour market regions have unemployment rates of 5 per
cent or below.
 NSW leads: Seven of the ten regions with the lowest unemployment rates in Australia can be found in
NSW.
 Queensland lags: Five of the ten regions with the highest unemployment rates can be found in
Queensland.
The data on regional unemployment gives insights on which economies are performing best and are driving revenue and investment
opportunities.
What does it all mean?

The Reserve Bank believes ‘full employment’ roughly correlates with a jobless rate near 5 per cent. And
remarkably a third of Australian regions have recorded jobless rates averaging 5 per cent or below over the past
year.

NSW leads the nation’s economies at present. So it makes sense that it dominates the list of regions with the
Craig James, Chief Economist
Twitter: @CommSec
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Economic Insights: A third of Australian regions at ‘full employment’
lowest unemployment rates in the nation. Sydney’s Eastern Suburbs recorded a 2.9 per cent jobless rate over the
year to October, followed by Sydney’s Northern Beaches (3.0 per cent) and Queensland’s Darling Downs –
Maranoa (3.2 per cent).

While Queensland dominates the regions with high jobless rates, encouragingly the jobless rate in Brisbane’s
Inner City averaged just 3.4 per cent over the past year.

Interestingly, there are only two Western Australian regions ranked in the 20 regions with the highest
unemployment in the nation. At the other end of the scale, both Bunbury and inner Perth have low unemployment
averaging 4.1 per cent over the past year.

Other data released today perhaps gives part of the reason why more people are saying that they are ‘underemployed’ – that is, they would like to work more hours. Indeed it may be because there is a near record number
of seniors in the workforce that are providing good and effective competition for other workers or budding workers.
Back in 2002, just over 6 per cent of people aged 65 years or above were in the workforce. Now participation
stands at 12.6 per cent and it is by no means clear that the participation rate has peaked.

At the same time, more than 56 per cent of people aged 60-64 years are still in the workforce. Both the 65 years
plus and 60-64 years categories posted recorded participation rates in August before easing a touch in the past
two months.

While some Aussies would like to work more hours, employers have to make a judgement on which workers will
be most productive, most cost-effective, most reliable and/or are best placed to work the extra hours.
What is the importance of the report?

The Australian Bureau of Statistics (ABS) provides detailed labour market figures one week after releasing ‘top
level’ statistics of employment & unemployment levels across states and territories. The detailed data is useful in
identifying broader underlying trends and instructive about the health of the economy.
What are the implications for interest rates and investors?

Investors are right to question the job figures. It isn’t a case of just accepting that statistics of unemployment or
under-employment are ‘correct’. The jobless rate may not be just under 6 per cent due to the vagaries of the
surveying method. But because the surveying method has been consistent over time, the trend is the most
instructive. And the national jobless rate is at 3½-year lows.

Jobless rates are at or below 5 per cent in a third of Australian labour market regions. Other trends like rising
participation rates of senior workers and higher ‘under-employment’ rates can be added into the mix.

Overall the job market continues to improve with low wage growth and rising productivity giving employers good
reasons to be retaining existing workers and putting on more staff. The situation needs to be constantly monitored
as the Reserve Bank is working on the premise that ‘full employment’ is near 5 per cent.

More employees may say they would like to work more hours, but that in itself is not an indication of labour
market slack – especially if data continues to show record numbers of seniors in the workforce. It is a competitive
job market and employers will always seek the best mix of workers, skills and hours to achieve the most profitable
result.
Craig James, Chief Economist, CommSec
Twitter: @CommSec
November 24 2016
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