Job creation hit three-year low in 2016
The past year was the worst for job creation since 2013 as the employment market showed worrying signs of weakness in the non-mining states.
New official statistics show that the nation as a whole had a net gain of 91,500 jobs – the worst yearly figure since 2013 – as the winding off of the mining boom continued to dampen the economy.
The unemployment rate rose slightly to 5.8 per cent in December. Credit:Louise Kennerley
But economists pointed out that the non-mining states, with the exception of migration-boosted Victoria, were struggling to pick up the slack.
National year-on-year employment growth was 0.8 per cent in 2016, well below the 20-year average of 1.8 per cent and below 2015's 2.6 per cent figure.
In December, the national unemployment rate rose slightly above expectations, rising to 5.8 per cent on November's 5.7 per cent figure. This took the unemployment rate to its highest level in six months, erasing the gains made in the later half of 2016.
Last year, the NSW economy added just 1100 jobs – a figure well below its population growth.
According to the Australian Bureau of Statistics' release of the December unemployment figures on Thursday, the level of job growth in NSW was virtually non-existent in 2016. "It's very low," says NAB economist Tapas Strickland.
"In seasonally adjusted terms, no net jobs were created in NSW over the past year."
The figures came as business leaders lauded the economic stewardship of departing Premier Mike Baird.
The federal government insisted the figures were encouraging.
"Continued growth of jobs across Australia demonstrates our economy is showing resilience and that our plans are delivering more job opportunities for more Australians. This is particularly important as we continue our transition beyond the mining boom," Education Minister Simon Birmingham said.
The opposition's employment spokesman, Brendan O'Connor, accused the government of failing to deliver its jobs plan.
"You're looking at 1.8 million Australians looking for more work or some work and not being able to find it," he said.
NSW is coming off uncharacteristically strong employment growth in 2015, when the housing construction boom along with large-scale government infrastructure projects created thousands of temporary jobs.
Instead the momentum has shifted to Victoria, where the population is rapidly growing. Victoria's strong result, which saw the state add 118,400 jobs, helped mask the slowdown in job creation in other non-mining states.
Employers carefully managed their workforces through a period of weak economic activity in 2016, said CommSec senior economist Savanth Sebastian.
"In effect, the labour market was largely marking time over the majority of 2016 but there are initial signs of a shift coming," he said.
But others expected the performance of the economy to remain subdued. Capital Economics' economist Paul Dales said the labour market is still "fragile".
"[T]he high shares of part-time employment and underemployment mean the labour market is weaker than the headline figures suggest," he said.
"They are a further restraint on wage and income growth. So while the employment figures are moving in the right direction, any further progress this year will be slow rather than spectacular."
While the unemployment rate is 0.8 per cent lower than a year ago, the number of full-time jobs in the economy actually declined 0.4 per cent in 2016, despite strong gains in November and December.
The rise in December's unemployment rate came despite higher-than-expected job creation. The economy outstripped economists' expectations of 10,000 new jobs, creating 13,500 in December.
It added 9300 full-time roles and 4200 part-time positions.
But a rise in the participation rate – the number of Australians both employed or actively looking for work – meant the total unemployment figure rose. Workforce participation, which has yet to recover to its level before the global financial crisis, edged up to 64.7 per cent in December, from 64.6 per cent in the month before.