ABS: Payroll jobs pick up in January, but at a slower pace

Highlights

• As per the Australian Bureau of Statistics, payroll jobs rose in the fortnight leading up to 15 January 2022.
• The rise in the first two weeks of January came after a steep drop in payroll jobs seen during December 2021 end.
• Payroll jobs rose across almost all industries except Education and Training.

Payroll jobs continued a longstanding trend and inched higher in the fortnight to 15 January 2022 after a steep drop in December. The latest data from the Australian Bureau of Statistics (ABS) reveals that payroll jobs rose 1% in the fortnight to 15 January, much like last year. However, the rise in payroll jobs in January 2022 was much lower than that seen last year.

During the last two weeks of December 2021, payroll jobs fell 6.8% to a seasonal low, only to be followed by a jump in the first half of January 2022. Though this is a common occurrence, the January 2022 gain seems dismal compared to the large decline seen in payroll jobs during December end. Last year, the decline of 6.4% in December 2020 was followed by a rise of 3.7% in payroll jobs in January 2021. Thus, the current rise of 1% is no match against the previous year’s numbers.

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Delayed return from the holidays

The anomaly seen in the growth of payroll jobs this year can be attributed to the slow rebound of businesses after the holidays. As the Omicron variant gripped the economy by the throat, many businesses were forced to remain shut in fear of contributing to the spread. Additionally, weather has also been unfavourable in certain regions, leading up to these results.

While payroll jobs are essential in mapping short term changes in the employed force, it is important to note that they might overestimate the changes in the overall labour force. Employees might be away from paid work for a short period without losing their jobs, which may impact short-term statistics.

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Industry and state-wise performance

Majorly all industries were affected in line with the aggregate data, observing a rise in payroll jobs in the first two weeks of January following a fall in December end. However, in line with the overall trend, the rise in January 2022 was smaller compared to the increase in January 2021 across these industries.

On the bright side, retail trade saw a greater rise in payroll jobs in the first half of January (1.1% up) compared to the previous year (0.7% up). On the contrary, Education and Training industry saw the largest and only fall in payroll jobs over the first two weeks of January.

Among the states, Western Australia saw the maximum jump in payroll jobs of 3.1% during the period, followed by Queensland, where payroll jobs rose 2.1%. Surprisingly, New South Wales was the only state wherein payroll jobs remained weaker in the first half of January compared to the same period last year.

Impact on interest rates

While expectations regarding interest rates have been changing drastically since last year, most experts are of the view that a hike will be announced by the end of 2022, if not mid-2022.

The improvement in payroll jobs data might be an indication that an interest rate hike is nearer. However, one cannot neglect that the increase in payroll jobs has been unsatisfactory. The weakness in this year’s payroll data can be attributed to the Omicron variant, which has once again disrupted the recovering economy.

The ABS data on Labour Force, which is due next week, may also show the impact of a slower improvement in payroll jobs. However, the labour market performance over the coming months will primarily decide the economic growth. The strength in the Australian economy will majorly influence the central bank’s decision on interest rates.

Bottom Line

As stated before, payroll jobs data is more short-run oriented. The remarkable drop in sentiment during the first two weeks of January resonated not just in payroll jobs data but also in consumer sentiment and business conditions data. However, these short-term falls might be overshadowed by an overall improving economy, especially as fears surrounding the Omicron variant are easing with time.

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