Today’s release of labour force data for Dec has shocked the market with its strength. Commentators had been expecting the headline (seasonally adjusted) unemployment rate to remain unchanged at 6.3% with about 5,300 new jobs being created. In reality we saw a huge 37,400 new jobs (with 41,600 of these full-time) and the unemployment rate drop to 6.1%. In addition revisions to previous months saw the Nov employment data increase to +45,000 (from +42,700) and the unemployment rate drop to 6.2%.
These kind of wild swings in the jobs data once again force us to focus our attention rather more on the much less volatile Trend series. Here we see new jobs at +14,400 with Nov revised up to +15,400 (from +7,100). The Trend unemployment rate remains unchanged at 6.2% (after Nov was revised down to 6.2% from 6.3%). Taken together there is no doubt that this is a strong set of numbers. The A$ has jumped about half a US cent on the release and is now trading around US$0.82.
The story in Queensland is one that the LNP will be only too pleased to see as we move into the final 2 weeks of the election campaign. December saw an enormous 22,500 new jobs added (seasonally adjusted) with Nov also revised higher (to +1,600 from +900). The headline unemployment rate has fallen a somewhat unbelievable 0.7% to 6.1% (from a revised 6.8% in Nov). Full-time jobs were up 34,400 in December.
This scale of volatility will inevitably lead to sceptics taking a closer look at at the Trend series; as well they might. The Trend data for Dec shows employment actually fell 600 (although the 5,500 decline in Nov was revised to just a 1,900 drop). The Trend unemployment rate remained unchanged at 6.6% (with Nov having been revised sharply lower to 6.6% from 6.9% previously).
This data is certainly better than we have seen for some time in Queensland and the Trend is showing signs of improvement, but before we get too carried away we should bear in mind that Trend employment has still fallen for the past 7 consecutive months. Trend working population in Queensland has increased by 1.9% in the past year while Trend employment growth has been just 0.4%. Compare that to the national situation where Trend employment is up 1.4% over the year and we can see that there is still plenty to be concerned about when it comes to Queensland jobs.
UPDATE: As might have been expected the LNP have jumped on the seasonally adjusted data in their press release re the jobs data. Can’t say that I blame them, but those in the know should be able to see through the spin to the broader picture which remains weak but improving.
To quote Callum Pickering in the Business Spectator today:-
“Unfortunately, most of the mass media continues to focus on seasonally-adjusted estimates. The same estimates that only a couple of months ago the ABS basically scrapped because it had no idea what the heck was going on.
Given the circumstances, it is clearly more sensible to focus on the trend estimates. They might not be as sexy — and they certainly won’t give you great headlines — but they are reliable and sensible and provide a more accurate view of the Australian economy.”