Unemployment rate jumps to 6.3% but the data is confusing

The labour force data for July released by the ABS this morning shows the headline (seasonally adjusted) unemployment rate jump to 6.3% (from an upwardly revised 6.1% in June) despite the creation of  38,500 new jobs. The markets had been expecting only about 10,000 new jobs but the unemployment rate to increase only slightly to 6.1%. The reason for the apparent paradox was a sharp uptick in the Participation Rate to 65.1 (its highest rate in over two years). Most of the increase in jobs came from part-time positions which were up 26,100 while full time jobs rose 12,400. The seasonally adjusted data shows a total of 163,000 new jobs created this year at a monthly rate of close to 23,300. This compares to jobs growth last year of 200,900 at a monthly rate of 16,740. The headline figures look poor but dig deeper and we see a more resilient labour market than expected.

This kind of volatility in the seasonal data simply adds further weight to the need to consider the Trend series. Here we see employment up 17,800 (after June’s increase was revised up to 20,600) with the unemployment rate remaining stable at 6.1%. The Trend data suggests employment growth running at about 23,700 per month this year, up from 13,200 last year.

In Queensland the headline (seasonally adjusted) data suggest the unemployment rate jumped to 6.5% (from 6.1% in June) on the back of a loss of 2,800 jobs. This is the second consecutive month of job losses and sees the monthly average fro this year fall to just 2,100. This rate of employment growth is only very slightly better than last year’s 2,000 per month. Although QLD too benefited from an increase in Participation Rate the effect was much smaller than at the national level (up from 65.2 to 65.3).

With a smaller data set for the State level numbers it is even more important for us to focus on the Trend series and here we see employment rose 3,600 for an average monthly increase this year of 4,300. This is a sharp increase from the paltry 600 per month seen last year. As the second chart below makes clear, we are seeing a distinct improvement with employment growth just about keeping pace with the growth of the working population. As a result the Trend unemployment rate stands at 6.3% (down from 6.4% in June, although that number was itself revised up from 6.3%). The Trend suggests that the labour market in Queensland has improved significantly since last year but that we are yet to see employment growth at a fast enough pace to make any real impact on the unemployment rate.

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