Very strong jobs numbers, but focus on revisions and the Trend and it’s less exciting

The ABS jobs data for May has surprised on the upside. New jobs created (according to the headline seasonally adjusted series) were at 42,000; well in advance of estimates that centred around 12,000. However, what has been less commented upon is the fact that the April decline (originally slated as 2,900) has been sharply revised to a fall of 13,700. The ABS makes particular note of some problems with the original data from WA, although they claim that this has been removed from the seasonally adjusted series for both WA and Australia.

The headline seasonally adjusted unemployment rate has fallen to 6.0% while April was revised down to 6.1% (from 6.2%). the Forex markets have reacted strongly to the headlines and the A$ initially jumped almost a whole cent, but has now started to lose much of that gain; the reasons for that become clear when we look more closely at the data.

Given the issues that the ABS have been having for some time with the seasonal data (and today’s comments about the WA data will not ease people’s minds about this anytime soon), we really should be paying much more attention to the less exciting, and certainly less volatile, Trend data. Here we see the Trend unemployment rate down to 6.0% from an unrevised 6.1% in April. Trend employment rose by 15,700 while the April rise was revised up slightly to 21,300 (from 19,100). These are positive figures, and suggest that the labour market is tracking pretty well, but they are nothing like as dramatic as the seasonally adjusted data would suggest at first sight.

When we consider the data for Queensland a focus on the Trend series becomes even more important. The Trend unemployment rate in QLD was unchanged at 6.5% in May (although April was revised down from 6.6%) with a total of 3,700 new jobs (after April was revised up from +2,500 to +4,500). The second chart below makes clear that this level of jobs growth is just about enough to keep pace with working population growth, so without further increases in jobs growth we remain unlikely to see the Trend unemployment rate falling much faster.

For the record, the seasonally adjusted data for QLD showed 18,700 new jobs (with April revised up to +7,300 from +5,200) and an unemployment rate at 6.3% (after April was revised down to 6.6% from 6.7%). However, we would once again stress that when considering the State data we must insist on Trend analysis.

The ABS will release regional labour force data next Thursday at which point we will be updating our Conus Trend series for all the regional areas in Queensland together with Male/Female and Youth data for the Cairns region.

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