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Data out this week from the ABS for Payrolls suggests that the labour market was actually stronger in early January this year than it was at the same time last. With a year’s worth of data we can now, for the first time, make year-on-year comparisons of this series.
The Payrolls Index (where week ending March 14th 2020 =100) in Australia stood at 92.7 in the week ending 4th Jan 2020 (note these figures are low due to the seasonal impact of Christmas and New Year at the end and start of the year). For the week ended 2nd Jan 2021 we see an index of 93.9%; suggesting an improvement of 1.2% year-on-year. However, there are two caveats we need to be aware of.
The difference in date between Jan 4th and Jan 2nd may not appear significant but it almost certainly is. The way that the 2019/20 Christmas/New Year period fell meant that the week to Jan 4th included 4 full working days (27/12, 30/12, 2/1 & 3/1) while in the 2020/21 period the week to end Jan 2nd included only 3 (29/12, 30/12 & 4/1). That one day (or 25%) difference could certainly serve to decrease the week-ending Jan 2nd 2021 figure relative to the previous year. This suggests that the gain could be actually somewhat greater than the 1.2% suggested by the data (we estimate 0.2-0.4%).
but….
Over the course of the year we have seen an increase in the working age population in Australia of 0.9%. Therefore, all things being equal, we would expect to have seen a 0.9% increase in the Payrolls data just because of a larger working population.
Taken together, and bearing in mind the fact that the Payrolls data is NOT the same thing as the Labour Force Survey data (from which working age data comes), we would suggest that the national increase for the year (comparing like with like) is in the region of +0.5/+0.7%
In Queensland the apparent increase was 1.1% but the population effect comes in at 1.4% therefore suggesting a modest actual change of -0.1/+0.1%.
NSW Payrolls data shows a 1.4% increase and the population effect here is just 0.5%; the actual effect therefore might be as high as +1.1/+1.3%.
While in Victoria the Payrolls increase was just 0.1% with a population effect of 1.0%. Therefore we would suggest an actual decline in Victoria over the year of some -0.7/-0.5%.
This points towards a healthy Labour Force Survey result (December numbers out from the ABS tomorrow) with market expectations centred on an increase of 50,000 employed.
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