Jobs growth in Western Australia has consistently outstripped the rest of the country, despite the release of data last week showing NSW and Victoria had the country’s strongest employment growth.
The monthly labour force figures for March contained some big surprises but analysts who looked at the trend data were unmoved in their views of the economy and interest rates.
The monthly data showed an unexpectedly large 44,000 increase in the number of jobs created across Australia in March.
There was also an increase in the labour force participation rate, which meant the unemployment rate was steady at 5.2 per cent.
On a state-by-state basis, NSW and Victoria led the employment creation, which seems at odds with their status as being in the ‘slow lane’ of the two-speed economy.
However, most economists dismissed the unexpectedly strong jobs growth as a statistical blip.
The attached graph prepared by the Chamber of Commerce and Industry of WA shows that over the past 12 months, WA has clearly outstripped the rest of the country.
WA has added more than 40,000 jobs while the rest of the country has lost more than 10,000 jobs.
That pattern is mirrored in the state-by-state unemployment rate. WA’s rate (4.1 per cent) continued to be the lowest of all the states, while Tasmania (7 per cent) and Victoria (5.8 per cent) had the highest.
Patersons Securities economist Tony Farnham said the continued strong showing by WA on a trend basis was easily explained by the stream of jobs created by the mining boom.
The ABS survey coincided with the latest quarterly Commonwealth Bank-CCI Survey of Business Expectations, which illustrated some of the flow-on effects of the tight labour market.
The survey found that wage costs were the biggest concern for the year ahead.
Some 15 per cent of businesses rated wage costs as their number one issue for 2012 and 39 per cent of respondents ranked it in their top-three concerns.
Wage costs were a major issue for businesses of all sizes and operating across all industry sectors.
Another significant concern was labour availability, with just over 10 per cent of WA businesses indicating that finding suitable staff was their number one issue for the year ahead and a quarter of respondents ranking it in the top three.
The CCI said this came as the availability of staff in the WA economy hit a post-GFC low.
Mining and agriculture firms were most concerned about filling vacancies (more than a third rated labour scarcity in their top three priorities), while consumer-facing businesses (retail and hospitality) were less concerned.
This may reflect the weak trading conditions in these industries.
Other issues causing concern among the survey respondents were the state of the domestic economy and rising input costs (energy and materials).
Meanwhile, economists believe the March labour force data will do nothing to dissuade the Reserve Bank from cutting interest rates by 0.25 per cent in May.
“The trend in jobs growth is simply not strong enough to stop unemployment from rising,” AMP chief economist Shane Oliver said.
“Over the last year jobs growth has been just 37,600 whereas Australia needs to generate around 148,000 jobs a year to stop unemployment from rising,” Mr Oliver wrote in a research note.
“The likelihood of increased unemployment ahead along with chronic weakness in key sectors such as retailing, housing, manufacturing and tourism at a time when inflation is benign means that the better than expected March jobs figures do not diminish the case for lower interest rates from the RBA.”
