By Jason Muscat, FNB Senior Economic Analyst.
The 3Q17 Quarterly Employment Survey (QES) was worse than we had anticipated, and showed that the economy shed 31,000 jobs in the quarter, a decrease of –0.9% y/y. Of particular concern was just how broad based the job shedding was, with only mining (4,000) and trade (38,000) registering year-on-year gains.
The biggest contributor to the fall was the community services sector (encompasses government employees) which lost 106,000 jobs over the past year. We believe this ongoing trend reflects efforts to reduce the public sector headcount, but this was significantly offset by public sector wage growth which expanded by 7.7% y/y for community services employees and 10.1% at electricity utilities, well ahead of the quarterly inflation rate.
The ongoing strain in the manufacturing and construction sectors was evident in the gross earnings increase for employees, which were both well below the rate of inflation (3.4% y/y and 0.2% respectively). We maintain that the employment rate is likely to remain flat over the forecast horizon given low levels of investment, confidence and economic growth.
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