Employment grows again…but unemployment rate ticks higher

The August labour force data from the ABS this morning paints a mixed picture; but it’s one that it unlikely to get the RBA changing its mind anytime soon.

Employment grew by 34,700 (seasonally adjusted) which was rather more than the market expectations of 15,200. However, compensating for that to some degree was a downward revision to the gain last month (from 41,100 to 36,400). Nevertheless, the data continues to show robust employment growth. Trend employment growth is now running at 2.5% for the year (it’s sat between 2.5% and 2.6% since April).

However, a continued pick-up in participation (PR is now at another record high of 66.2) saw the unemployment rate edge higher again to 5.3% (both Trend and seasonallly adjusted). If the unemployment rate is to reverse its recent climbs we will need to either see employment growth pick-up (which appears unlikely given the already solid pace) or participation easing somewhat. It wouldn’t take much….if participation was to revert to the level seen in April (at that time a new record high) of 65.9 then, all other things being equal, the unemployment rate would now be 4.8%.

In Queensland the picture is less confused and more unambiguously poor. When considering the data at state level we always prefer the Trend series, given the high level of volatility of the seasonally adjusted data. Here we see employment increased by 4,900 (after July’s increase was revised down from 6,100 to 5,100). Trend employment growth now sits at 2.0% for the year.

Despite a slight dip in participation the unemployment rate remains stuck at 6.4% (actually up from 6.37% to 6.44% and therefore very close to being rounded to 6.5%). This is its highest level since Feb 2015. If there is a silver lining in the Queensland data it comes when we consider full-time employment. Unlike at the national level, where full-time employment has accounted for some 60% of all employment growth in the past 12 months, in Queensland full-time employment makes up 99% of all employment growth. Nevertheless, employment growth across the state is simply not fast enough to keep up with growing population; significantly increased employment will be required to return the state to anything close to the national average.

One of our favourite measures of labour markets is hours worked per capita of working age population. This ‘sees through’ issues around particiaption changes and the mix between full and part-time employment. Unfortunately, as the chart below makes clear, this series merely confirms the rather poor state of the labour market at both national and state level. The apparent recovery at the national level witnessed since 2017 has clearly run out of steam recently, and in Queensland we now sit close to all time lows.

Next week sees the release of the ABS original regional labour force data which will allow us to update our Conus/CBC Staff Selection Trend series for the SA4 regions of Queensland.

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