The employment figures by sector for 2013 paint a hopeful picture that record low interest rates are boosting job creation.
From the start of 2013 to the latest available figures, for November, the Australian unemployment rate edged up from 5.4 to 5.8 per cent.
It is not outside the realms of possibility that unemployment could end up having touched 6 per cent when the Bureau of Statistics releases the December figures on January 16.
However, RBC Capital Markets head of Australian economics Su-Lin Ong says there is some good news in the detail of which industries added jobs during 2014.
“What we’ve seen are some gains in employment in construction and retail, the typically rate sensitive sectors and ones that seem to be responding more to the RBA’s easing measures and historically low rates,” she observed.
Construction and retail joined health care and social assistance as the only sectors to add jobs every quarter last year.
Su-Lin Ong says health and social services has seen very steady jobs growth for a number of years, unaffected by economic ups and downs.
“Consistent with an ageing population, ongoing health needs, that sector seems to add to jobs quarter in, quarter out regardless of the cycle,” she added.
The big job losses last year came from manufacturing in the first three quarters of the year, professional and technical services in the second half of the year, and a steady fall throughout the year in administrative and support services.
Offsetting mining decline
Despite the peaking of investment in new mines, mining employment rose for the last three quarters of 2013.
Su-Lin Ong expects this to reverse and follow the recent downward trend in professional, scientific and technical services – a sector which covers many of the engineers and white-collar service providers connected with mining.
“We would expect, given the mining capex [capital expenditure] cycle, that maybe the professional services is telling us a better story and we would expect, at some point, mining employment to turn much weaker, and definitely we think [that] would be the story for 2014 and 15,” she forecast.
The challenge facing Australia’s policymakers is whether the sectors that are growing will add enough jobs to offset those, such as mining, that will be contracting.
Su-Lin Ong is hopeful that retail and construction can fill at least a large part of the gap created by mining.
“It’s encouraging because both those sectors are labour intensive – we know that construction employment is a little over 10 per cent is a little over 10 per cent of total employment, and similar type numbers as well for retail,” she said.
“In 2014 there are still some concerns really in terms of mining and related employment, manufacturing, administration, hopefully the continued growth in the rate sensitive sectors of employment will temper that to a degree.”