Jobs growth still strong, but growth is tapering

Filled jobs rose by 2.1%pa in February 2024. Although annual growth is still relatively solid, it is at its slowest since January 2023, reflecting that growth is tapering. 

Filled jobs in February 2024 were 0.3% higher than in January 2024, led by growth of 0.3% in service industries (seasonally adjusted). Growth lagged in goods-producing industries (0.0%) and in primary industries (-0.7%). 

Public sector-led industries have driven much of the service industries growth over the past year, with public administration and safety up 5.3%pa, education and training up 3.5%pa, and health care and social assistance up 4.9%pa. Growth in tourism-related industries accounts for the remainder of service industry growth, although the increase in tourism-related jobs has run out of steam in the past six months as the recovery of international tourism plateaued.

Wage inflation remains relatively strong, with 6.2% growth in earnings per filled job in February 2024 (seasonally adjusted). Wage inflation has followed jobs growth, with the strongest wage inflation in service industries (6.6%), followed by primary and goods producing industries (both 5.1%).

Employment continues to grow reasonably strongly at the headline level, with 2.1%pa growth in filled jobs, a modest slowdown from peak growth of 3.6%pa in April 2023. The loss of momentum has been limited this year by surprisingly strong monthly growth of 0.4% in January 2024 and 0.3% in February 2024, on a seasonally adjusted basis. 

Employment growth by industry shows emerging cracks in the economy, with declines in manufacturing, professional services, and administrative services. News of redundancies in public sector ”back office” roles are yet to translate into a perceptible change in public sector employment, although this situation is likely to change in coming months.

Growth in earnings was led by service industries, which was likely buoyed by the end of public-sector pay freezes and renegotiated collective agreements for teachers and nurses coming into effect. Earnings per job rose 5.1% in primary and goods producing industries, compared to 6.6% in service industries, showing that wage pressures remain present to some degree across the economy.

We expect net migration to remain significantly elevated throughout 2024 which, coupled with a pick-up in the unemployment rate, will limit further upward pressure on wages. We expect both jobs and earnings growth momentum to ease throughout 2024.