Despite some encouraging Payrolls data from the ABS and ATO for May from earlier this week (about which we advised a good deal of caution..see here) today’s Labour Force data for May shows another substantial decline in the number employed and, perhaps surprisingly, another drop in participation.
Note; The ABS suspended all Trend series estimates from April so all data quoted is the seasonally adjusted series
Employment declined by another 227,700 (after 13,100 was added to the April fall) which takes the combined decline since March to 835,100. This is far more of a decline that the market had been expecting (consensus has been for a fall averaging 75,000; our own estimate had been for a fall of 139,600). Since March the number counted as unemployed has increased by just 211,500; more than 620,000 people have left the workforce. The Participation Rate in May fell again to 62.9 and as a result the unemployment rate lifted to ‘only’ 7.1%.
We saw a similar story unfold in Queensland were employment fell by 28,100 (and 10,200 was added to the April decline). The decline in participation in Queensland was less dramatic (down to 62.6 from 62.8) and as a result the increase in the unemployment rate was greater (up from 7.0% to 7.9%).
The effects of the JobKeeper program are obviously severely distorting the Labour Force data with many people counting as still employed despite them doing little or no actual hours work. Therefore, as we noted last month, the hours worked per capita of working population has become a major focus when considering the actual impact on the labour markets. Here we see hours worked falling sharply again; Australia has dropped another 0.8% to 77.10 hrs while Queensland declined by 0.2% to 77.43 hrs (Queensland doing somewhat better on this measure supported by the slower drop in participation).
Next week will see the release of the original ABS regional labour force data at which point we will be updating our Conus/CBC Staff Selection Regional Employment Trend series.