Surge In Part-Time Work and Low Interest Rate Environment Provide Stimulus to Economy
As the post-election sentiment has begun to ease, a surge in part-time work coupled with a low interest rate environment has provided stimulus to the economy as the unemployment rate drops to 5.7 per cent in July.
ABS data collected over June-July has shown the biggest increase in employment rates, with 26,200 jobs gained – or almost twice the amount forecast – from June, when it rose by 10,800.
These gains edged the jobless rate down to 5.7 per cent from 5.8 per cent, equalling the lowest rate since September 2013.
Interestingly, whilst part-time work so significant uptake, full-time employment decreased by some 45,400 in one month alone, prompting some analysts to question the reliability of these short-term changes.
The continued rotation “toward robust part-time jobs growth… is helping contain headline unemployment,” said Morgan Stanley economist Daniel Blake.
Over the longer term, trends confirm the labour market has weakened this year compared to 2015.
In the first seven months of 2016, some 72,000 new jobs were created, less than half the 150,000 recorded in the same period last year.
These figures recorded are consistent with weak wages growth and cost cutting by companies across the board, which remained reluctant to increase investment and hiring on a weak domestic growth outlook.
As Savanth Sebastian from CommSec notes, “the election would have played a significant part in the pullback in hiring momentum over the first half of the year.”
“The hope would be that now the election is out of the way consumers and businesses will go back to spending, investing and hiring – particularly given the ultra-low interest rates on offer and significant improvements in the household budget.”
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