The monthly Labour Force data come out today and the ABS estimates that the seasonally adjusted unemployment rate increased from 5.1% to 5.4%
To be more accurate, the ABS estimates with 95% confidence that the unemployment rate increased anywhere from 0.1% to 0.5%. (but let’s not get tied up in statistics!)
The trend rate stayed steady at 5.3% only because the ABS revised the August trend rate from 5.2% to 5.3%
A focus on just the past year shows the ups and downs have been increasing in size, but the trend since April has been a noticeably upwards:
An increase of 0.3 percentage point is quite a jump and suggests the economy is not in great shape. Oddly however the number of jobs increased in September:
So why did the unemployment rate go up? Because the participation rate increased from 65% to 65.2% – due to an extra 53,000 entering the labour force:
Now an increase in people entering the labour force is good – but clearly employment growth is not enough to keep up with the demand for jobs – ie employment grew by 0.126% but the labour force grew by 0.439%.
One positive aspect is that full-time jobs increased, and even the full-time job trend growth is positive (if still anaemic) :
One interesting this is to compare the total unemployment rate with the unemployment rate for those looking for full-time work:
As you can see – when the economy is heading to the toilet (or already there), the rate of those looking for FT exceeds the overall rate.
At the moment the Unemployment Rate for those looking for FT work is 5.6% – slightly above the total rate – but a comparison of the past 2 years shows the total rate has of late being playing catch up. In April both were at 5.0%, in June both were around 5.3, but then for two months the total rate fell while the FT Unemployment rate increased significantly:
As can be expected when the full-time unemployment rate is increasing, a comparison of men and women shows that women have been gaining work, but men have been the losers in the past 4 months:
Hours worked also displays the difference with just looking at the unemployment rate – in seasonally adjusted terms hours worked rose in September:
But as the seasonally adjusted rate jumps around a bit I always find the trend graph good at given a picture of how things are going – but as with all trend data you have to realise it in essence is backwards looking and subject to variance – and indeed in August the trend picture was looking much more pessimistic:
What seemed to have been a deep hole, now looks to be on the improve.
One aspect of the increase in participation rate but not an equal increase in employment is that there was rather a big spike in the unemployed numbers last month
So the upshot of all of this in terms of my favourite graph of employment to population ratio?
No change at all – steady at 61.7:
But as you can see, it is starting to take us a long time to get back to where we were prior to the GFC – and we’re actually getting into 1981-82 recession territory:
Why is this happening? Most likely because the pre-GFC ratio of 62.8% (trend) of the population employed is likely to be the high water mark for all-time. Our population is ageing. Each month more baby-boomers are retiring who aren’t being replaced by the same number of 15-19 year olds. In the 1980s we saw an unprecedented surge in the number of women entering the labour force. That surge won’t happen this time.
For 30 years – since the 1981-2 recession economic growth has seen (and to an extent been due to) increases in the percentage of the population working. That’s not going to happen again. Policy makers need to come up with some new ideas this time round.
OK. Let’s look at the states:
Gee Campbell Newman, how are things going up there?
OK let’s look at the annual growth:
So much for the 2 speed economy being WA, QLD and the rest, QLD you’re back in the pack. Now it would be easy to lay all of the blame at Newman’s door, but QLD more than WA is affected by the high dollar (due mostly to international tourists).
And where does this all leave us come Melbourne Cup Day and interest rates? Well the market is currently pricing in a 78% chance of another cut – down to 3.0%.
I think that’s a good bet.