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Australia creates jobs at US speed, still not enough
[SYDNEY] Australia is creating jobs at almost the same pace as the United States' stand-out labour market, yet diverging demographics have sent unemployment rates - and the public mood - in opposite directions.
The latest breakdown on employment by industry from the Australian Bureau of Statistics shows 238,000 jobs were created in the year to May, a growth rate of 2.1 per cent.
That was only a fraction lower than the 2.2 per cent pace rate boasted by US payrolls - widely considered the star sector of the economy.
Yet Australia's workforce expanded by even more in that 12 months, rising almost 252,000. With more people looking for work, the unemployment rate actually edged up to 6.0 per cent, from 5.9 per cent in May 2014.
In the same period, the US jobless rate went from 6.3 per cent to just 5.5 per cent, breaking below Australia's rate for the first time in eight years.
The contrast has had a clear impact on national sentiment.
The University of Michigan's measure of US consumer confidence, for instance, was up almost 17 per cent this month from a year earlier. A comparable Australian measure from Westpac was just 2 per cent higher.
Part of the divergence on unemployment is due to Australia's relatively rapid population growth, which at 1.5 per cent is among the highest in the rich world and more than twice that of the US.
Much of this is due to skilled migration, which pours a steady stream of new workers into the national pool. Australia also has a larger proportion of people in the workforce, with a participation rate of 64.7 per cent compared to 62.9 per cent in the US.
Economically, brisk population growth and high participation are usually to be welcomed, but it also means the jobs market has to run faster just to stand still. "There's no doubt jobs growth is reasonable but it could, and needs to be, better if the unemployment rate is to trend consistently lower," said Michael Workman, senior economist at Commonwealth Bank of Australia. "Ideally, we need to be heading towards the full employment level of 5 per cent over the medium term." There are signs things are moving in the right direction thanks mainly to services. Led by a boom in healthcare, this combined group created 300,000 jobs in the year to May for a growth pulse of 3 per cent. "Healthcare is only going to get bigger as the population ages," notes CommSec chief economist Craig James. The sector already employs four times as many people as finance and six times that of mining. "Really, this latest jobs data should shake off more of the lingering pessimism in the economy."