Labour Force data disappoints…but there are some confusing factors still at play

There had been expectation that, after a sharp fall in employment in Sept, that there might have been an uptick in October as the lockdowns in NSW and Victoria started to relax. In reality employment fell again (by 46,300) and the unemployment rate climbed to 5.2% (from 4.6%) as people re-entered the labour force (PR was up by 0.13 ppts); labour force was up 35,500. Employment growth across the nation has now fallen to +0.7% pa and is down 1.1% since Jan 2020.

The vast bulk (40,400) of the employment declines were in full-time positions.

We should take note of the fact that the sampling period for this report (26th Sept – 9th Oct) captured a period of changes in some lockdown restrictions, but was before larger changes in mid-October. It is therefore likely that some of the positive effect of restriction easing is captured by way of people re-entering the labour force before the effect of full opening (and therefore employment increases) is also captured. This effect would show up as an unexpectedly large increase in the unemployment rate; which is what we see here.

In Queensland we also saw a drop in employment (down 7,800) with full-time positions down 8,600. However, Queensland the participation rate fell a little (down 0.08 ppts) which meant the rise in the unemployment rate was only to 5.1% (from 4.9% in Sept) with the labour force up just 300. It’s been a long time (actually since Feb 2016) since the unemployment rate in Queensland has been below that nationally. Clearly the Queensland labour market, which has not been as impacted by lockdowns and subsequent opening up, is a lot less distorted at this point than that nationally.

As we have been noting for some time, the unemployment rate is a poor indicator of labour market health at a time when distortions are so rife. We have instead tried to focus on hours worked per capita as a more accurate indicator of what’s going on. At the national level hours worked per capita fell in October and is now down 0.82% from a year ago. In Queensland, while hours worked per capita also dipped in October, they remain up 0.85% from a year ago.

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