Labour market
Queensland’s employment grew 3.7 per cent in 2022–23, above the Budget forecast of 3¼ per cent. The stronger than forecast growth primarily reflected revisions to ABS civilian population estimates, which resulted in higher employment estimates.
The unemployment rate averaged 3.7 per cent in 2022–23, in line with the Budget forecasts. This was Queensland’s lowest year-average unemployment rate since 2007–08 and the second lowest on record since monthly ABS Labour Force estimates began in 1978.
Partially reflecting stronger growth in population and domestic economic activity in 2023–24 than was forecast at Budget, and the historical ABS revisions that have been implemented since Budget, employment is now forecast to grow by 1¾ per cent in 2023–24 (compared with 1 per cent at Budget) and 1¼ per cent in 2024–25 (compared with 1½ per cent at Budget).
The unemployment rate is expected to increase from its record low level, as the impacts of interest rate rises are fully felt, and household consumption slows, but remain low by historical standards (Chart 4). The unemployment rate is forecast to be 4¼ per cent in 2023–24 and 4½ per cent in 2024–25.
Chart 4: Labour market forecasts1, Queensland
1. Year-average. 2023–24 and 2024–25 are forecasts.
Sources: ABS Labour Force and Queensland Treasury.
The participation rate is expected to moderate slightly from its elevated level of 66.6 per cent in 2022–23, to 66¼ per cent in 2023–24 and 66 per cent in 2024–25.
The strength of the labour market is clearly evident across the state, including across regional Queensland. The unemployment rate in regional Queensland was 3.9 per cent in 2022–23, which was the lowest unemployment rate in the regions since estimates began in the late 1990’s. Employment in regional Queensland grew by 5.1 per cent in 2022–23, the strongest regional employment growth since 2004–05.
Regional labour market conditions going forward are expected to move broadly in line with the state as a whole.
Queensland’s Wage Price Index (WPI) grew by 3.6 per cent in 2022–23. Following strong growth of 2.3 per cent in September quarter 2023 (4.7 per cent over the year), wages growth is expected to pick up to 4¾ per cent in 2023–24 (compared with 4 per cent forecast at Budget). Wages growth will then moderate in 2024–25 to 3½ per cent as capacity constraints in the labour market begin to ease.
Combined, these forecasts for year-average wages and inflation imply that real wages will grow by half a percentage point in both 2023–24 and 2024–25.
As indicated above, the strong growth in employment has been supported by the ongoing strength in Queensland’s population growth, which is expected to have increased to 2¼ per cent in 2022–23, reflecting a surge in overseas migration as departures have temporarily lagged arrivals.
With interstate migration forecast to stabilise at around pre-COVID levels and net overseas migration to be maintained at elevated levels, Queensland’s population is forecast to grow a further 2 per cent in 2023–24 before easing back to growth of 1½ per cent in 2024–25.
Box 2: Queensland’s strong economic recovery continues
Queensland’s ongoing strong economic recovery and performance following the COVID-19 pandemic continues to highlight the resilience of the state’s diversified economy.
Consistent with the strong economic and labour market performance outlined in the 2023–24 Budget, Queensland has continued to outperform the national average in a range of key indicators, as outlined below.
- As of September quarter 2023, Queensland’s state final demand was 12.2 per cent above its pre-COVID level of March quarter 2020, above the 12.0 per cent growth recorded in the rest of Australia over that period.
- After surging 5.5 per cent in 2021–22, Queensland Gross State Product rose a further 2.3 percent in
2022–23, to be 9.8 percent above the pre-COVID level in 2018–19. This compares favourably with economic growth of 9.3 per cent nationally and the 8.6 per cent and 7.8 per cent growth in Victoria and New South Wales respectively over that period (Chart 5).
Chart 5: Economic growth1 since 2018–19
1. Real Gross State Product.
Source: ABS Annual State Accounts.
- In October 2023, employment in Queensland was 286,900 persons (or 11.1 per cent) above its preCOVID level of March 2020, the second strongest growth rate of any state or territory and accounting for one quarter of national job gains over the period.
- In September quarter 2023, the Queensland WPI grew 2.3 per cent, the strongest wages growth of any state and the highest quarterly growth since commencement of the WPI series in 1997. Annual growth in Queensland’s WPI in the year to September quarter 2023 accelerated to 4.7 per cent, well above national growth of 4.0 per cent and the strongest of all the states and territories.
- Since the onset of the pandemic, Queensland has welcomed nearly 120,000 net interstate migrants, more than triple than the next closest state, Western Australia (Chart 6).
Chart 6: Net interstate migration since March quarter1 2020
1. Original, quarterly.
Source: ABS National, state and territory population.
Risks to the outlook
While international supply chain disruptions have largely eased, the ongoing war in Ukraine, as well as the conflict in the Middle East represent the major geopolitical risks to the outlook, especially in relation to key commodity prices such as oil and therefore energy costs. Recent weakness in the Chinese economy also presents a potential risk to the outlook.
In addition, both at the national and international level, the combination of high inflation and monetary policy tightening pose ongoing downside risks to economic growth. While inflation rates have trended downwards and expectations are that the peak in interest rates is close, it will take some time for these risks to fully dissipate.
Domestically, the recent declaration of an El–Niño weather event in Australia poses a significant downside risk to agricultural output and exports over the forecast period.
