Employment edges higher in July despite lockdowns

Posted on August 19, 2021 by Pete Faulkner - Jobs, NSW, QLD, Uncategorized

Against the expectations of many employment lifted slightly in July, up by 2,200 (there was at least one notable exception to the those expecting a fall; Justin Smirk at Westpac was calling for a lift in employment and his note is well worth reading for insight into why today’s numbers have surprised so many). As a result of this lift along with a decline in participation, particularly driven by a large drop in NSW, the headline unemployment rate has fallen to 4.6%.

In Queensland employment dipped 6,600 and participation only fell by 0.1 ppts and as a result the unemployment rate lifted slightly to 5.2% (from 5.1%).

However, the big story out of this data (as highlighted by Justin..see above), and as we have been highlighting for some time, is the hours work data. What we see here is another sharp decline at both the national and Queensland level with a very significant decline in NSW. The ABS provided data today on the number of people employed but working zero hours (data which is normally only released in their Detailed Labour Force data a week later) and what this highlighted was a lift in those numbers in July to their highest level since Sept 2020. In Queensland, where the impact of lockdowns have been much less dramatic, zero-hours workers actually fell and are now at their lowest level since Dec 2019.

Some months ago we discussed the idea of an ‘effective unemployment rate‘ where we adjust for the effect of those counted as employed but working zero hours and the decline in participation that we saw during the early stages of the pandemic. We had moved on from this analysis as things seemed to be moving back to a more ‘normal’ situation but recent lockdowns make that decision appear rather premature. You can read a fuller description of the concept of ‘effective unemployment rates’ here, and note from this post in February that actual and effective rates had largely converged.

If we do a similar analysis today we see that in NSW (and as result of that, Australia more generally) we have seen a divergence open up again. The effective rate in NSW would be 8.0% compared to an actual 4.5%; due to a sharp spike up in zero-hour workers to a level not seen in the State since May last year and a participation rate that has fallen 1.0 ppts this month as people exit the labour force.

On the other hand, in Queensland we have a seen a fall in zero-hours workers and only a modest decline in participation. As a result the headline unemployment rate looks relatively high at 5.2% while the ‘effective rate’ sits at just 4.0%.