Deceleration in Labor Market Growth Revealed: Analysis of December Quarter 2023

Highlights:

• Total hours worked in Australia decreased by 0.3% to 5,863 million hours in the December quarter of 2023, marking the first consecutive quarterly decline in a decade, excluding the early pandemic period of 2020.
• Filled jobs saw a modest increase of 0.4% (57,000 jobs) during the same quarter, indicating a slower growth rate compared to previous quarters, with annual growth at 2.8%, significantly lower than the peak observed in March quarter 2023.
• Job vacancies declined by 5.6% in the December quarter, leading to a reduction in the proportion of vacant jobs to 2.4%, the lowest since September quarter 2021, while various industries experienced varying impacts on hours worked and job creation.

Hours Worked Decline

The Australian Bureau of Statistics (ABS) disclosed a 0.3% decrease in total hours worked, amounting to 5,863 million hours in the December quarter of 2023. ABS's head of labor statistics, Bjorn Jarvis, noted a 1.0% drop from the peak in June quarter 2023, marking the first consecutive quarterly decline in a decade, excluding the early pandemic period of 2020. However, the December 2023 quarter remained 2.0% higher than the same period in 2022.

Filled Jobs and Labor Market Moderation

Despite a 0.4% rise in filled jobs (57,000 jobs) during the December quarter, the growth rate was slower than previous quarters, with an annual increase of 2.8% (428,000 jobs), significantly lower than the 4.7% growth observed in March quarter 2023. Jarvis suggested this slower growth, coupled with declining hours worked, indicated a moderation in the Australian labor market since mid-2023.

Job Vacancies and Market Tightness

Job vacancies fell by 5.6% in the December quarter, contributing to a decrease in the proportion of vacant jobs to 2.4%, the lowest since September quarter 2021. Despite consecutive declines, the labor market remains relatively tight compared to pre-pandemic levels.

Industry Insights

Hours worked declined in 10 out of 19 industries, with notable decreases in Information media and telecommunications (-10.6%) and Accommodation and food services (-8.7%). Accommodation and food services were particularly impacted, showing a 5.8% decrease from the previous year and a 10.9% drop

since December quarter 2019.

Filled jobs increased in 11 industries, primarily in Professional, scientific and technical services, and Health care and social assistance. However, Accommodation and food services experienced a significant decline of 7.6%, attributed to decreased demand for discretionary activities.

Conclusion

The December quarter of 2023 witnessed a deceleration in labor market growth, characterized by declining hours worked and a moderation in job creation across industries. While some sectors experienced notable declines, the labor market remains relatively tight, reflecting ongoing challenges and shifts in economic dynamics.

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