- Telephone
- Email
The August Labour Force data released by the ASBS this morning showed a thumping 146,300 decline in employment (market expectations had been closer to a drop of 100,000) but a seemingly paradoxical drop in the headline unemployment rate to 4.5%. But don’t be mislead; these are bad numbers and the unemployment rate is simply no longer a valid indicator of labour market strength (if it every was…but that’s a discussion for another day!).
A sharp decline in the participation rate (down 0.8 ppts to 65.2) is the statistical culprit here. People have simple removed themselves from the labour force (that is, those employed or defined as unemployed by the ABS) and as a result the decline in employment has not fed through into a big move up in unemployment (in fact the number unemployed fell 22,000!!) and as a result the unemployment rate did not jump.
If we look beneath the hood of the numbers things become a bit clearer. The number of hours worked per capita of the working age population fell by 3.8% from July (and is down 5.8% from the recent high in May this year). The number of people classified as employed but working zero hours due to being stood down jumped to its highest level since May last year, and is up 326% from May this year.
The Payroll data from mid-July to mid-Aug would have suggested an even bigger drop in employment, given a 2.4% m/m decline in payroll numbers equates to about a 315,000 employment decline. However, unlike during the JobKeeper era, those receiving payroll support are no longer being paid by their employers (which meant they were still counted on payrolls) but rather are getting paid directly and therefore not showing up in the Payroll numbers.
In Queensland, despite only limited lock-downs, we see a very similar story. Employment fell by 29,800, participation dropped by 0.7 ppts and the headline unemployment rate lifted only slightly to 5.3% (from 5.2%). Interestingly, because payroll support is not such a distorting issue in QLD at the moment, the Payrolls data (which showed a 0.9% 4-week avg decline from July to Aug) was a far better predictor of employment decline; 0.9% Payrolls suggested a 23,900 drop in employment. Perhaps surprisingly, hours worked per capita fell even faster in QLD than nationally; down 5.4% from July.
Zero hours workers in QLD also jumped, although by nothing like the extent seen nationally (+180% since May). We will post later today looking at the effect of zero hours workers, and the drop in participation, on effective unemployment rates. At this stage suffice to say that the effective unemployment rate in Australia is more than 7% while in QLD it is closer to 6%.
We are proud to have CBC Staff Selection as supporters of the Conus/CBC Staff Selection Trend Employment and Jobseeker data series