Australian Bureau of Statistics (ABS) has recorded a 0.2 per cent lift in the unemployment rate to 3.7 per cent in July 2023. Despite this, the head of labour statistics Bjorn Jarvis claimed it is still a tight labour market.
According to ABS data, monthly hours worked increased by 0.2 per cent in July, while employment decreased 0.1 per cent. Jarvis said some of the increase in hours worked reflected fewer people than usual taking leave during the school holidays.
“The strength in hours worked shows that it continues to be a tight labour market,” Jarvis said. “Hours worked were 5.2 per cent higher than in July 2022, well above the 2.8 per cent annual increase in employment.
“The strength in hours worked over the past year, relative to employment growth, shows the demand for labour is continuing to be met, to some extent, by people working more hours.
Jarvis added that there were 386,000 more full-time workers in July 2023 than the same month a year ago, which is consistent with the growth in hours worked.
“In contrast, part-time employment only increased by 1,000 people,” Jarvis said.
Meanwhile, employment dropped by around 15,000 people and the number of unemployed increased by 36,000, which led to the 0.2 per cent increase in the unemployment rate.
Jarvis said the fall in employment follows an average monthly increase of around 42,000 people during the first half of this year, with employment still around 387,000 people higher than July 2022.
“July includes the school holidays, and we continue to see some changes around when people take their leave and start or leave a job,” Jarvis said. “It’s important to consider this when looking at month-to-month changes, compared with the usual seasonal pattern.
“The only other fall in employment in 2023 was in April, which also included school holidays.
“While unemployment increased by 36,000 people in July, to 541,000, it was still around 172,000 lower than before the pandemic.”
ABS data also showed employment-to-population ratio fell 0.2 percentage points to 64.3 per cent, while the participation rate also decreased 0.1 percentage point to 66.7 per cent.
“Despite these falls, both indicators were still well above pre-pandemic levels and close to their historical highs in May.”
The underemployment rate remained at 6.4 per cent in July - around 2.4 percentage points lower than before the pandemic.
Meanwhile, the underutilisation rate - which combines the unemployment and underemployment rates - rose 0.2 percentage points to 10.1 per cent. This was 3.9 percentage points lower than in March 2020.
Underlying trend data
Trend unemployment remains at 3.6 per cent, in line with the updated figure for June. Employment grew by 27,000 (0.2 per cent) and hours worked increased 0.3 per cent in July.
The employment-to-population ratio remains high at 64.4 per cent, in line with the updated figure for June.
“Hours worked has consistently grown faster than employment over the past 12 months.”
The participation rate remains high at 66.8 per cent, according to Jarvis, while the underemployment rate remains at 6.4 per cent.
“In trend terms, all key indicators still point to a tight labour market," Jarvis said.