Shock labour force data sees unemployment rate drop to 6 1/2 year low

Posted on October 18, 2018 by Pete Faulkner - Jobs, QLD, Uncategorized

Today’s labour force data for Sept has surprised the markets with just a 5,600 increase in employment (seasonally adjusted) but a drop to an unemployment rate of 5.0%, which is the lowest since April 2012. Expectations had centred around an increase in employment of around 15,000 with the unemployment rate remaining at 5.3%. The reason for the apparent paradox was the participation rate (as is so often the case) which dropped sharply to 65.4. If we try and see through this participation effect and consider the employment to working population ratio we see that actually fell slightly on the back of the weaker employment growth.

In situations like this we always prefer considering the Trend series and here we see employment growth was 26,400 (which is somewhat higher than the 12 month average pace of 24,200) with the unemployment rate unchanged at 5.2% (after Aug was revised down from 5.3%). Trend employment growth now sits at 2.4% y/y; its slowest pace in just over a year.

The story in Queensland is a similar, although weaker, one. Seasonally adjusted employment fell by 11,600 (after a similar increase in August) but the unemployment rate dropped to 6.0% on the back of a big drop in participation. The Trend series highlights the fact that employment growth in Queensland is slowing sharply; Trend employment was up just 1,900 in Sept and is now well below the 12 month average of 3,300. The Trend unemployment rate remained at 6.1% (August was revised down from 6.3%) but the employment to working population ratio fell reflecting the slowdown.

Trend employment growth is now at just 1.6% y/y in Queensland; its slowest pace in 17 months.

We particularly like the measure of total hours worked per capita of working age population (as this sees through issues around participation rates and the split between full and part-time employment). This measure highlights for us the continued under-performance of the Queensland labour market compared to the nation as a whole, which is seeing a slow but steady grind upwards.

Regional labour market data will be released next week at which time we will be updating our Conus/CBC Staff Selection Regional Trend data for Queensland.