Roy Morgan Research (RMR) last night released its unemployment estimate for the month of March, which registered a large fall in the unemployment rate to 11.6% from 12.3% in February (see next chart).
The result was due largely to seasonality, with unemployment typically falling in March as school leavers and students commence their university studies. In fact, the RMR index has recorded a fall in March in eight of the last nine years.
According to Gary Morgan:
“In March as younger Australians return to University Australian unemployment has fallen substantially (down 96,000) to 1.465 million Australians (11.6%, down 0.7%). In addition, under-employment fell significantly (down 135,000) to 945,000 Australians (7.5%, down 1.0%) – a total of 2.41 million (19.1%) Australians unemployed or under-employed…
“Analysing the results by age group reveals unemployment fell most significantly amongst younger Australians: 18-24yr olds (24.5%, down 3.5% in March) and 25-34yr olds (10.0%, down 2.4%). Unemployment also fell amongst older Australians: 50-64yr olds (7.7%, down 1.6%) and those aged 65+ yrs old (2.7%, down 2.5%). However, unemployment rose amongst the largest part of the workforce, 35-49yr olds (11.4%, up 2.5%).
“Despite the expected fall in March, unemployment is now significantly higher than a year ago in March 2013 – up 96,000 over the past 12 months. This rise has been entirely driven by an increase in people looking for full-time work (now 814,000, up 99,000 since March 2013) while those looking for part-time work has barely changed over the same time period (651,000, down 3,000).
As explained previously, RMR measures employment differently from the ABS:
According to the ABS definition, a person who has worked for one hour or more for payment or someone who has worked without pay in a family business, is considered employed regardless of whether they consider themselves employed or not.
The ABS definition also details that if a respondent is not actively looking for work (ie: applying for work, answering job advertisements, being registered with Centre-link or tendering for work), they are not considered to be unemployed.
The Roy Morgan survey, in contrast, defines any respondent who is not employed full or part-time and who is looking for paid employment as being unemployed…
Since Roy Morgan uses a broader definition of unemployment than the ABS, it necessarily reports a higher unemployment figure. In addition, Roy Morgan’s measure tends to be far more volatile, owing to the fact that it draws on a smaller sample than the ABS and is not seasonally adjusted.
Both the official ABS unemployment rate and the unofficial RMR measure tracked each other closely until mid-2010 before diverging sharply (see next chart).
The reasons behind the big divergence between the RMR and ABS unemployment measures since mid-2010 remain a mystery, but probably has something to do with RMR’s picking-up discouraged workers.
In any event, the trend in the RMR survey confirms that the Australian labour market remains weak, with jobs growth below the level required to soak-up the growing population.
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