Unemployment expectations trend up

From Westpac:

• The Westpac-Melbourne Institute Unemployment Expectations Index fell 5½% in Jan following a 4½% lift in Dec, a 2.7% rise in Nov, and a –3.9% fall in Oct. Recall that a lower (higher) reading from the index indicates reduced (increased) concern around the labour market.
• In trend terms, the index rose 0.5% in Jan from a 0.4% rise in Dec (revised from +1.6%) and a 1.1% rise in Nov. Last month it looked as if the worm had turned with a trend deterioration in expectations. This still holds in Jan 2015, but only just.
• In the year to Jan, unemployment expectations are down 1.1%. Compare this to the 5.3%yr rise to Dec 2014 and 5.5%yr to Nov. The most recent trend deterioration in expectations had suggested that household were becoming more nervous again about the employment outlook. As 2015 starts, we are getting signs that households may be getting a little more positive about the labour market.
• During 2014, there was only a small rise in the unemployment rate of 0.2% to 6.1% well under what the level of unemployment expectations had been suggesting. Remember the question is about the change in unemployment so the level of the index should be compared to the change in the unemployment rate
• Compare this to the change in the employment to population ratio, which is immune to any changes in the participation ratio. Through the year to Dec, the employment/pop ratio was flat thus generating a pop in the annual change in employ/pop ratio. This has divergence to unemployment expectations has happened before and can last for a number of months. But in the end, the change in employment to pop ratio tends to correct to unemployment expectations.
• Overall, in Jan households continue to believe that current pace of employment growth is not robust enough.

Full chart pack here.