After the shock of a weak jobs report last month (see here), the data for August has come in so strong that it’s almost beyond belief. The headline seasonally adjusted unemployment rate has fallen to 6.1% from 6.4% in July with a massive 121,000 new jobs in the month. The markets had been expecting jobs growth of between 10,000 and 15,000, so this number is a real surprise. However, the fall last month was actually revised even weaker (to -4,100 from -300), although this does almost nothing to mitigate against the strength in the August data.
Of the 121,000 jobs 14,300 were full time; adding these to the over 15,000 new full-time jobs seen in July and we have almost 30,000 new full-time positions in the past 2 months. Adding to the good news is the fact that the Participation Rate rose to 65.2 with both June and July also revised slightly higher. Without that sharp increase a jump in new jobs of this scale would have seen the unemployment rate falling a long way below 6%.
While this all looks rather too good to be true it’s worth noting that the employment to working population ratio (which ignores distortions like the PR) was up to its highest level in 13 months at 61.3. The ABS Trend series (which smooths out much of this extreme volatility in the seasonally adjusted figures) shows Trend employment rose 18,700 for an increase of almost 116,000 over the past 6 months (or 19,300 pm). The Trend Unemployment rate increased to 6.2% (from 6.1%). Given a working age population that is growing at about 25-30,000 per month and a PR around 65 we would need to see employment growth of between 16,250 and 19,500 pm to maintain the unemployment rate at these levels. The Trend data suggests that the economy is doing that (or better); the worst may be over for the unemployment rate.
Queensland also saw improvements, although here they were less dramatic. Headline employment grew by 26,500 after a downwardly revised fall of 13,300 in July. A sharp increase in the Participation Rate to 66.8 (from 66.3, and its highest since Apr 2012) held the unemployment rate to 6.7% (down from 6.8% in July). Full-time employment rose by just 3,000 (after a decline of 11,300 last month). Considering the Trend series we see the Trend unemployment rate actually increased to 6.7% (from 6.6%). Trend employment grew by just 800 (from +2,900 in July) and has fallen sharply since the early part of this year. In the past 6 months Trend employment has grown by 27,800 (or 4,633 pm). With the working age population growing at about 5,200 pm and a PR around 66.5 we need to see about 3,400 new jobs a month to keep the unemployment rate stable. While this has happened on average over the past 6 months, the rate of employment growth has fallen sharply in the past 3 months (to just 2,430 pm on the Trend data) so we need to see stronger growth coming through in coming months if Queensland is not to slide even further behind the national average.
Regional jobs data will be released next Thursday at which time we will also update the Conus Trend series for QLD regions. The Dept of Employment Small Area Labour Market data for the March quarter is yet to be released; we had been told that a release in “early Sept” was likely.