Expectations of job losses in Australia rise again

The ABS on 24 March released Australia’s February 2016 detailed quarterly labor force data. There has been an easing of upward pressure on jobless rate from redundancies. However, there was just a temporary reversal in the sharp decline in job loss expectations because of shutting-down or downsizing of business. Out of 19 industries, employment growth of at least 2% y/y was seen in nine industries in February, whereas eight industries recorded decline in employment.

Employment growth in household services was very solid until the last three months. Some of the volatility implies strong employment in health care and social assistance until recently. According to ANZ, a decline is expected in measure health employment growth; however, the underlying growth is likely to remain strong.

Meanwhile, employment growth has been weak in hospitality, in line with weak output growth in the industry, in spite of a boost from the lower AUD. On the contrary, employment in retail trade has been solid, especially in hardware and other consumer goods retailing. In February, business services employment grew about 4.5% y/y. Meanwhile, employment in mining stabilized with growth registered in large metal ores industry in WA recently. NSW has also registered growth; however, employment in mining in South Australia has declined sharply.

Employment in civil and heavy engineering construction is continued to be weighed on by declining resources investment, particularly LNG projects. However, there has been a recovery in residential building construction employment, countering the weakness in heavy and civil engineering construction employment. The weaker outlook for building construction will be a headwind for construction in employment in the near term.

Meanwhile, employment in manufacturing continues to be weak in spite of strong demand for construction materials and favorable AUD. Since mid-2012, manufacturing employment has declined 30%.