As summarised earlier, the Australian Bureau of Statistics (ABS) today released labour force data for the month of March, which registered decline in the headline unemployment rate (from 6.2% to 6.1%), with the improvement masked somewhat by a downward revision to February’s result (from 6.3% to 6.2%).
The result beat analyst’s expectations, who had expected the unemployment rate to remain steady and 15,000 jobs to have been created.
In trend terms, the unemployment rate was also steady at 6.2% in March, although last month’s figure was also revised down by 0.1% (from 6.3% to 6.2%):
Total employment increased a seasonally adjusted 37,700 to 11,720,300, with full-time employment increasing by 31,500 to 8,131,400 and part-time employment increasing by 6,100 to 3,588,900.
Meanwhile, the Participation rate increased 0.1 pts to 64.8%.
The trend in total employment has improved in recent months (see next chart).
Full-time jobs growth (1.7% seasonally adjusted, 1.5% trend) is decent but unspectacular (see next chart).
Surprisingly, Victoria has driven jobs growth over the past year in seasonally adjusted terms. By contrast, Queensland has shed jobs (see next chart).
And Queensland and Tasmania now have the highest seasonally adjusted unemployment on the mainland, whereas Western Australia and New South Wales have the lowest (see next chart).
The state seasonally-adjusted figures are notoriously volatile and subject to a big margin of error. As such, the below chart shows the ABS’ trend unemployment rates, which shows Western Australia with the lowest unemployment (but rising), South Australia with the highest, Tasmania and Victoria’s improving, and New South Wales deteriorating slowly. Note also that the national unemployment rate (6.3%) is also trending upwards, albeit slowly:
Aggregate number of hours worked rose in seasonally adjusted terms in March (up 4.8 million hours or 0.3%). It has also risen by 1.7% over the past year, which is just above the growth in the population:
The below chart, which tracks the changes in hours worked on a trend basis, shows a mixed bag across the states and a moderately improving trend nationally (+1.8% YoY):
The average number of hours worked remains near all-time lows:
But the participation rate is recovering, as is the employment-to-population ratio:
Finally, to round things out, the next chart summarises the annual change in the key employment aggregates on a seasonally-adjusted basis:
It is important to note that this month’s labour force release has been affected by changes in the ABS methodology, in particularly with regards to seasonality. As noted by Westpac:
“While we would expect that the ABS is taking due care to ensure they don’t publish an extraneous number, there have been a number of changes in the way the ABS conducts supplementary surveys within the Labor Force Survey so we should remain prepared for the possibility of a surprising monthly print,” Westpac Banking Corp. economists said in a research report prior to the release.
I view this month’s improvement in the labour force data as nothing more than short-term respite to a deteriorating medium-term situation.
Undoubtedly, the labour market is being supported by record high dwelling construction and other housing-related industries, brought about by cheap credit and continued strong house price appreciation. However, the housing market is unsustainable and is likely to top-out sometime later this year or early next, just as the unwind of mining investment accelerates and the local car industry shutters.
2015 was never the problem for Australia’s labour market. It is 2016 and 2017 that are the concern, as the economy faces the triple threat of falling mining-related employment; falling housing-related employment; and falling manufacturing (car industry) employment.