The Flat Tax War Begins

If there has been one aspect of the debate over superannuation taxes that has become clearer to me as it has gone on is that it is really just the first salvo in the war by vested interest groups, and equally vested media groups for a move to a flat income tax.

We now live in an environment where the suggestion of progressive taxation results in media articles accusing proponents of indulging in class warfare.

The front page of today’s Oz made it clear that superannuation is just the small fry. The bigger game is income tax.

The front page featured an article by Adam Creighton – he who last year called for policy to be less evidence based and more ideology driven (oh and democracy isn’t sustainable either) – which argued against progressive income tax.

The article’s headline gives away its intent:

Wayne Swan's rich targets already pay the bill

Creighton notes in the third paragraph that:

Australia's tax system is highly progressive, with a top marginal tax rate of 45 per cent - above New Zealand's at 33 per cent and the US at 35 per cent.

Now that would seem to make us the very epitome of socialism, but Creighton fails to mention a few other countries. Thankfully for us the OECD has the information and we can see that the UK for example has a top tax marginal rate of 50% [Neerav Bhatt on Twitter has reminded me that the Cameron Govt has just reduced this to 45%], Belgium has 50%, Germany has 45%, Israel has 48%, the Netherlands has 52%, and Japan is just below us with a 40% top tax bracket.

Now actually comparing the progressivity of different country's taxation system by looking at what is the top marginal tax rate levied by the central government is actually quite simplistic (borderline stupid, really), especially when you consider if you include (as the OECD does) Personal income tax PLUS employee social security contributions from the central and the “sub-central” (ie state Govts in the USA) then the USA’s top marginal tax rate comes in at 43.2%, and Australia is pretty much right in the middle of the OECD pack.

But as there are much better ways to look at progressivity of tax and I’ll do that another day.

For now let’s keep to flat tax and Creighton’s argument, which he states here:

Overall, the top fifth of taxpaying households are the only net contributors to Australia's welfare state, once handouts and use of government services such as education and healthcare are taken into account. The more you earn the more you pay, and at an increasing rate. A chief executive earning $1 million a year is required to pay more than $423,000 in annual tax, almost 40 times as much tax as a high school teacher earning $60,000 a year.

A junior apprentice pays an average tax rate of a little over 9 per cent compared with 38.3 per cent for the successful barrister.

Now I don’t know about you, but I am not too stunned by the fact that someone earning a million dollars pays a shirt load more tax than a school teacher, but apparently this is news (front page news at that). Indeed get me some feathers and knock me down, because did you know a barrister pays more tax than a junior apprentice?!

!!! (I mean wow!!)

Yes boys and girls, Adam Creighton has discovered that Australia's income tax is …. (get the kids to leave the room, this is pretty shocking stuff) progressive. (The Tele is right, Stalin is in control!)

There’s even a handy little graph provided (on the front page) to show us the injustice:

Now a few things about this graph. First. How about that scale! It certainly make for a big bow of progressivity!

But that diagonal red line is the key. That is The Oz letting you know that those teachers, public servants are getting in their view the equivalent of a tax concession!

OK. Let’s get to the graph. Here’s what Creighton’s graph looks like with the correct scale.

Not quite as impressive is it? That’s because the first 4 categories in the Oz’s graph occur in the first three income instalment in the real to scale version.

So OK, they use dodgy graphs to sell their point (beats the hell out of being honest with your readers I guess).

But let’s get down to it. Here’s the current Marginal Tax Rates, and I’ll go to $1m to match Creighton:

But the thing about taxation is just because you are in the marginal tax bracket of 45%, you don;t actually pay 45% of your income in tax, because of course the 45% rate only applies for that part of your income that is above $180,000. So a much better way to look at things is average tax rates:

So as you can see the line goes up fairly steep (as sign of progressivity) and then flattens out. From this you can work out that if say you earn $100,000 you’ll have to pay (before deduction and not including the Medicare levy) around 25% in tax, even though you are in the 37% tax bracket.

Now if we were to apply the logic of The Oz’s flat tax diagonal line, here’s what the average tax rate would look like compared to the current:

As you can see everyone except anyone earning $1m dollars pays more under this flat tax rate of 42.35%

Now maybe The Oz does think everyone should pay more tax, but no one – not even the lobbyists for rich people, says a flat tax should start at zero. There are many good reasons for having a tax free threshold, and other than social reasons, economically it make little sense to tax someone when they earn so little that the tax would actually be a disincentive to work and also would likely encourage cash in hand work.

The current tax free threshold is $18,200. Up till last year it was $6,000. But there is also a low income tax offset, which meant till last year the effective tax free threshold was $16,000, and now is $20,542.

Let’s assume the flat tax folk want to simplify the tax scheme (that’s often the reason given when they want to hide their real reason). So let’s not bother with the low income tax offset, but let’s start our 42.35% flat tax at $18,200, and see what happens to our average tax rates:

Notice anything that happened because of that tax free threshold? Yep. Because it lowers everyone’s average tax rate and because the top marginal tax rate is now 42.35% and not 45% that means those at the higher end actually would pay less tax!

How does that look in terms of difference of total tax paid? Have a look:

Yep, under this flat tax rate everyone who earns less than $707,400 pay more tax, those who earn over pay less.

But even the flat tax disciples don’t want this scenario. We only have to go back to Creighton’s article – it is the top marginal tax rate that is the problem. The Henry Tax review called for a flat tax of 35% starting at $25,000 and going to $180,000, at which point the 45% would kick in as usual. And because we’re dealing with real world ideas now, I’ll include in the current average tax rate the impact of the low income tax offset:

As you can see there is not as much change – because the rate isn’t as high, and also because the 45% top tax rate still exists. But some people still need to pay more tax, and some pay a bit less:

Those from $25,000 to around $165,000 pay more, and those after pat $297 less – it stays flat because that top tax rate remains as before. You can see there’s a big decrease in tax for those between the current effective tax free threshold and the $25,000.

But note who is paying the most extra  - those earning between $50,000 and $100,000 – ie those pretty much in the median income grades.

Equitable? I think not.

And remember as well that 45% tax rate is still too high under the Henry recommendation. The IPA in its infinite, paid for wisdom, suggests in it’s 75 big ideas that:

“Number 45. Introduce a single rate of income tax with a generous tax-free threshold”.

So let’s put that threshold at $25,000, where the Henry Review suggested and keep the 35% of the Henry review as well, but we’ll remove the 45% rate at $180,000 because the flat taxers only want one tax rate.

Let’s look how that compares:

And now we see the real reason why those who favour flat tax rates are usually those who either are rich, write for newspapers read by the rich, or receive donations from the rich to lobby on behalf of the rich.

So who would pay more or less compared to now?

Kind of stunning ain’t it.

But because looking at things in $ amounts can be misleading, let’s look at the change in tax paid as a percentage of income:

Always remember when someone starts talking to you about how there should be just one flat tax rate for everyone who really will be winning out of the change. Unless you happen to be one of Creighton’s barristers or chief financial officers, it most likely is not going to be you.

What is the Median Australian Income?

My Drum post today, as long time readers of all good blogs would know, owes a bit of debt to Matt Cowgill’s post of a couple years back. In the time since, the ABS has brought out some new figures, so I thought it timely, in light of Joel Fitzgibbon’s remarks about people struggling on $250,000 to update the figures.

One of the things about “equivalised” household income is that you can get a picture of what the disposable income needs to be for every size of household to maintain the same standard of living.

So for example the median disposable income for a single person is $37,180 and for a family with 2 adults and 2 kids it is $78,078.

Here’s what the median income is for different sized households:

The data also lets us have a look at how the different percentiles have grown, going back to 1994. It might not shock you to discover that the 90th percentile has grown the most and the 10th percentile has grown the least (and remember the P90 is not the top 10%, but those in the top 20 to 10%):

Certainly this does suggest the bottom 10% are being left behind. A good way to look at it is compare the ratio of the 90th percentile to the median and the bottom 10:

A clear increase in the size of the income of the 90th percentile compared to the 10th.

The next graph highlights just how far behind the bottom 10 precent are being left:

The gap between the median household and the bottom 10th has widened compared with the gap between the 90th percentile and the median income (though there has been a sharp reduction in the gap since 2007-08, no doubt showing the impact of the GFC on median incomes.

Here’s what the equivalised bottom 10 per cent per household looks compared to the median and the top:

But yes, we should worry about a class warfare being raged against those earning $300,000 or more, and keep as silent as the grave about Tony Abbott’s policy to stop the super tax offset for those earning less than $36,000.

UPDATE:

Martin Jones in the comments has drawn my attention to his most excellent post on the link between gross and equivalised income. He has a very spiffy calculator that lets you work out given your equivalised income.

The RBA leaves cash rate at 3%

Today the RBA announced that it was keeping the cash rate steady at 3%

This is what the cash rate looks like over the past 20 years:

As you can see form the 5 years average we’re in pretty new territory. I can’t imagine what the cash rate at the 7.25% that it was in early 2008 would do to the economy now. The only way we would get back to that level is if the banks closed the margins between the cash rate and their interest rates. For while the cash rate is well below the 20 year average, the standard mortgage low is below it, but by a fair bit less than is the cash rate. The small business loan on the other hand is pretty much right on the 20 year average

That leads to these spreads:

All of which looks horrible, but as readers of this blog would know, there’s a bit more to bank financing than the spread of the cash rate to the mortgage rate.

Take the spread of the cash rate to the term deposit rate:

After 12 years of the term deposit for $10,000 for 6 months being LESS than the cash rate, it is now (assuming the banks don’t adjust their rates after today’s decision) it is 85 basis points ABOVE the cash rate.

Savers rarely get a mention when talking about the cash rate. They should.

Similarly compare the spread between the deposit rate and the mortgage rate:

And what we discover is that the mortgage rate is actually closer to the deposit rate than it was for the average of the Howard years – meaning if you want to get to the Howard Government average, either mortgage rates have to go up, or deposit rates have to go down.

Anyhoo let’s look at the statement, and compare it with March’s:

First GLOBAL CONDITIONS

 March:

Global growth is forecast to be a little below average for a time, but the downside risks appear to have lessened over recent months. The United States is experiencing a moderate expansion and financial strains in Europe are considerably reduced compared with the situation through much of last year. Growth in China has stabilised at a fairly robust pace. Around Asia generally, growth was dampened by the earlier slowing in China and the weakness in Europe, but again there are signs of stabilisation. Commodity prices are little changed recently, at reasonably high levels.

Now April:

Global growth is forecast to be a little below average for a time, but the downside risks appear to be reduced. While Europe remains in recession, the United States is experiencing a moderate expansion and growth in China has stabilised at a fairly robust pace. Around Asia generally, growth was dampened by the earlier slowing in China and the weakness in Europe, but again there are signs of stabilisation. Commodity prices have declined somewhat recently, but are still at historically high levels.

The big difference is the downside risk have gone from “lessened” to “reduced”. OK, maybe that’s not a big difference. But certainly in April the RBA is more negative towards Europe, stating it is in a recessions, rather than saying in March that the financial strains there are reduced from this time last year. The rest is basically a cut and paste.

Next, FINANCIAL MARKETS

March:

Sentiment in financial markets is much improved compared with the middle of last year. Risk spreads have narrowed and funding conditions for financial institutions are more favourable. Long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Borrowing conditions for large corporations are very attractive. Share prices have risen substantially from their low points. However, the task of putting private and public finances on sustainable paths in several major countries is far from complete. Accordingly, as seen most recently in Europe, financial markets remain vulnerable to occasional setbacks.

April:

Internationally, financial conditions are very accommodative. Risk spreads are narrow and funding conditions for financial institutions have improved. Long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Borrowing conditions for large corporations are similarly very attractive. Share prices are substantially above their low points. However, the task of putting private and public finances on sustainable paths in several major countries is far from complete. Accordingly, financial markets remain vulnerable to setbacks.

Geez, they really go in hard on the Australian Govt debt and how it is crowding out lending for corporations. Oh wait, sorry that was in the fantasy version of the statement written by the Liberal Party economic team. Note the aspect about “highly rated sovereigns”, and our historically low debt. How low?

Real low.

Next, DOMESTIC CONDITIONS:

March:

In Australia, most indicators available for this meeting suggest that growth was close to trend over 2012, led by very large increases in capital spending in the resources sector, while some other sectors experienced weaker conditions. Looking ahead, the peak in resource investment is approaching. As it does, there will be more scope for some other areas of demand to strengthen.

April:

In Australia, growth was close to trend over 2012, led by very large increases in capital spending in the resources sector, while some other sectors experienced weaker conditions. Looking ahead, the peak in resource investment is drawing close. There will, therefore, be more scope for some other areas of demand to strengthen.

Not much change other than the resources peak is now “drawing to a close” rather than the end of the peak “approaching”.  We should note, “peak” doesn’t mean end of mining.

Onto DOMESTIC SPENDING:

March:

Present indications are that moderate growth in private consumption spending is occurring, though a return to the very strong growth of some years ago is unlikely. The near-term outlook for non-residential building investment, and investment generally outside the resources sector, is relatively subdued, though recent data suggest some prospect of a modest increase during next financial year. Dwelling investment appears to be slowly increasing, with higher dwelling prices and rental yields. Exports of natural resources have been strengthening, though recent bad weather is affecting some shipments at present. Public spending, in contrast, is forecast to be constrained.

April:

Recent information suggests that moderate growth in private consumption spending is occurring, though a return to the very strong growth of some years ago is unlikely. While the near-term outlook for investment outside the resources sector is relatively subdued, a modest increase is likely to begin over the next year. Dwelling investment is slowly increasing, with rising dwelling prices and high rental yields. Exports of natural resources are strengthening. Public spending, in contrast, is forecast to be constrained.

Again hardly any change. Of note for those who know for a fact that spending under this government is out of control: “Public spending, in contrast, is forecast to be constrained”.

INFLATION:

March:

Inflation is consistent with the medium-term target, with both headline CPI and underlying measures at around 2¼ per cent on the latest reading. Looking ahead, with the labour market softening somewhat and unemployment edging higher, conditions are working to contain pressure on labour costs, as was confirmed in the most recent data. Moreover, businesses are focusing on lifting efficiency under conditions of moderate demand growth. These trends should help to keep inflation low, even as the effects on prices of the earlier exchange rate appreciation wane. The Bank's assessment remains that inflation will be consistent with the target over the next one to two years.

April:

Inflation is consistent with the medium-term target, with both headline CPI and underlying measures at around 2¼ per cent on the latest reading. Labour costs remain contained and businesses are focusing on lifting efficiency. These trends should help to keep inflation low, even as the effects on prices of the earlier exchange rate appreciation wane. The Bank's assessment remains that inflation will be consistent with the target over the next one to two years

In March there was an ever so slight worry about pressure on labour costs. IN April is becomes “labour costs remain contained”. It’s like watching Beckett’s tragically much ignored play, “Waiting for Wages Breakout”.

MONETARY POLICY:

March:

During 2012, there was a significant easing in monetary policy. Though the full impact of this will still take more time to become apparent, there are signs that the easier conditions are having some of the expected effects. On the other hand, the exchange rate remains higher than might have been expected, given the observed decline in export prices, and the demand for credit is low, as some households and firms continue to seek lower debt levels.

April:

There are a number of indications that the substantial easing of monetary policy during late 2011 and 2012 is having an expansionary effect on the economy. Further such effects can be expected to emerge over time. On the other hand, the exchange rate, which has risen recently, remains higher than might have been expected, given the observed decline in export prices. The demand for credit has also remained low thus far, as some households and firms continue to seek lower debt levels.

This month the RBA is really let everyone know that the easing of monetary policy is working – ie in their view to the extent no more easing is required. But they also notice that people aren’t borrowing all that much more than they were prior to the easing and that the exchange rate remains high despite easing of commodity prices. How high?

It’s times like this I like to recall the only time I have had a holiday in America was in June 2001.

CONCLUSION:

March:

The Board's view is that with inflation likely to be consistent with the target, and with growth likely to be a little below trend over the coming year, an accommodative stance of monetary policy is appropriate. The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand. At today's meeting, the Board judged that it was prudent to leave the cash rate unchanged. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target over time.

April:

The Board's view is that with inflation likely to be consistent with the target, and with growth likely to be a little below trend over the coming year, an accommodative stance of monetary policy is appropriate. The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand. At today's meeting, taking into account the flow of recent information and noting that there had been a substantial easing of policy as a result of previous decisions, the Board judged that it was prudent to leave the cash rate unchanged. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target over time.

The only difference was the addition of this in today’s statement: “taking into account the flow of recent information and noting that there had been a substantial easing of policy as a result of previous decisions”.

All in all the RBA paints a pretty good picture. Inflation steady, growth doing OK, wages steady, but with the dollar high. It wasn’t surprising that they didn’t move, given last month's big jump in employment numbers. But given everyone expects that to be revised down, and perhaps lead to an increase in the unemployment rate (although this is less sure, given the statistical changes by the ABS affect more the employment and participation numbers than the unemployment rate), it’ll be interesting to see if that changes their outlook.

On the basis of today’s statement though, I doubt it.

Drum piece: Plus a look at Australian and USA’s GDP over the years

My Drum piece today looked at a few things about our economy and how it is going compared to the rest of the world, and also how we seem to be getting just a bit more confident.

This of course doesn’t mean we’re never had it so good or any such guff, but that given the high dollar and the continuing crapstorm happening in Europe and America;s sluggishness, we seem to be holding up ok.

Last week I showed a few graphs about our GDP growth compared to the USA, and someone asked how it has gone since we last were in a recession, so because I can’t turn down a request to do a graph here it is:

It serves to reinforce the message that avoiding the slump of the GFC was a big deal. Sure our mining boom increased our lead over the yanks, but what really put us in front was them falling off the GFC cliff, and even earlier their stumble during the Dotcom bubble bursting in 2000. You can see from 2003-2007 we do grow slightly more than does the USA, but the big difference occurs 2008-09.

Or to show that graphically, here’s the difference between our cumulative GDP growth since 1991 and the USA’s:

The boom (and their stumble from 2000 to 2007 did gives us a lead. But nothing improves your relative performance like  the other nation falling head first into a big pile of economic poo.

But hey that’s 20 years. How about 30 years? Let’s go back and see what the picture looks like if we include the big boom of the 1980s and our 1990s recession:

We both were hit by the early 1980s recessions, and again in the 1990s we were in the same boat. What you can also see in the 1990s recession while both nations slid a bit it was more about staying flat for a period than going right backwards. The GFC is a different fish altogether.

And again the spread:

OK look, I’m boring you here with all this short time stuff. Let’s go back to 1972. 40 years worth of context:

Now we’re really starting to se the big picture. Up till 2000 we were in lock step with the USA. They were hit by the Dotcom recession, we narrowly avoided it (because Costello sensibly let the budget go into deficit (though he kept it quiet when he did it), and then our mining boom began. Now by the end of 2007 we were looking pretty damn good. Our boom had put us nicely ahead – 10 percentage points – in effect it took from 2000 to the end of 2007 to put us 10 percentage points ahead of the USA in cumulative growth terms. But look where we are now. 

So all in all I think we can say, however it happened, and for whatever reason we did, we shouldn’t be bitching about missing out on the GFC. We should smile and get on with it.

One final thing. A lot is made of the “great moderation” that has occurred post the 1990 recession, and how we have avoided a recession. But we’re also avoided big booms of GDP growth as well. For example in the 1980s we had 8 quarters in a row where Australia's economy was growing by more than 4.5% per annum – and at one point it reached annual growth of 8.1%.

So is it better to have booms and busts or a long moderation?

Well here’s a comparison of the cumulative GDP growth in the 86 quarters since our last recession and the 86 quarter prior to that:

Steady as she goes, beats boom and bust all the way.

UPDATE:

And just because I’m a graph junky, here’s the same graph but looking at GDP per capita. Unfortunately the ABS only goes back to 1973 for GDP per capita so I’ve got the cumulative growth from then till 1994 to ensure we have 86 quarters each:

The moderation isn’t as stark – we’ve had a few more bumps since 1`991 on the per capita measure than we have on the total GDP growth. But still. At least we missed those God awful downward hits that we had in the twenty years from 1973.

Industrial Disputes: Unions forget they’re suppose to be on the warpath

Well along with the good employment figures, the ABS also released the quarterly industrial disputes, and surprise, surprise, the amount of working days lost fell in the December quarter:

Look I know, I know. Who wants all that context, – show us up close, show us the past 10 years:

OK, look context is confusing. We all know that the December quarter is the low one for strikes, after all this time last year, The Australian noted when trying to explain why industrial disputes fell:

“But industrial disputation fluctuates seasonally, and generally falls in the final quarter of the year as workers go on annual leave.”

And given disputes have fallen in 12 out of the past 20 December quarters I guess “generally falls” means, falls just a bit more than it rises.

But hey, let’s not get bogged down in facts. Let’s assume December is the low quarter. Let’s see what the figures look like if we just look at the December quarter:

Yep, it is the second lowest number of disputes in a December quarter since the ABS has started counting.

Second lowest.

Damn militant unions.

OK, OK, I know what you’re saying, the key is to look at the annual numbers:

Again, too much context, let’s look at that past 10 years

Yep it did rise, and now it’s going down. And why did it rise? In the main due to disputes in the Education and training and Health Care systems. Due to disputes with state governments. In IR systems outside of the Fair Work Act.

But hey, we need to return the balance in IR and all that.

What about actual number of disputes, rather than the number f hours lost. Surely the new IR regime has led to strike nirvana?

Jeebus. You can see why businesses, The Oz and the AFR are worried.

OK, look, Quarterly figures hide things. Let’s look at the annual numbers of disputes:

So the Fair Work Act came in in July 2009. Gee, you can see the big jump after that.

Here’s breakdown according to industry, which shows that again, Education & Health etc is the main area:

On the per thousand employees measure however, the coal industry has been the worst hit:

And for the context of the coal industry disputes (the figures only go back to 2008 and many quarters there is nothing to count):

Sure there was an increase on this measure in 2011-12. Seems to have eased a fair bit.

Any way, I think we can file this one with the wages breakout and the low productivity that the Fair Work Act has wrought on this country.

But no doubt the usual suspect will find something. My guess – the annual figures (and compare it to the bottom of 2007) and the coal mining per thousand.

Employment soars in February, Unemployment steady at 5.4%

Holy wow. No one saw this coming.

The Labour force figures released to day by the ABS, showed that employment grew in February by a whopping 0.6% in seasonally adjusted terms.

Now I know 0.6% doesn’t sound like much, but  to put it in some context, as stats wunderkind,Shane Wright, from the West Australian, noted soon after they were released, it was the biggest increase in employment in the month of January February since 1995. (He must have a seriously good spread sheet system going!)

There have been only 13 months this century where employment growth has been over 0.5%. That’s 13 out of 157 months. So let’s say this is a pretty good result. Here’s what it looks like over the past 5 years:

And if 5 years isn’t enough context for you, here’s the past 10 years:

Yep – it’s the second best month of employment growth in the past decade. Not too shabby.

I guess Glenn Stevens was on to something when he said before the economics committee last month, “Overall, there is a good deal of interest rate stimulus in the pipeline.”

There is a bit of debate about whether or not this figure is “real” given the ABS has revised its sample, and certainly the big surge is a bit more than you would have expected, so I say, look, let’s calm down. This is just an estimate, and will likely be revised next month, so it might fall below 0.6%, but I think you’d have to be the worst possible grouch to be thinking these figures are bad.

OK, to the unemployment rate. So we had a massive boost in employment, but the unemployment rate has… stayed flat.

It sits at 5.4% in both seasonally adjusted and trend terms.

The close up of the 12 month figures is interesting. Is the “flatness” a plateau or the top of a summit?

So why did the unemployment rate remain steady? Because of the increase in participation. Is this a cruel joke on Wayne Swan, that he can get a big boost in employment but no joy in the actual unemployment figure? No. The reason participation increased is because employment increased. People were coming back to the workforce. Were the situation such that employment wasn’t increasing, it’s likely participation wouldn’t have either.

The participation rate increased 0.3 percentage points from 65.0% to 65.3%. In trend terms it remained steady:

What this figure does however suggest is that the calculation of the ABS – both in terms of numbers employed and those in the labour force – has caused this jump.  Again, this doesn’t mean the unemployment rate is false, but that perhaps the employment growth and the participation rate increase are a bit overstated. Next month might see things in a more sober light.

Now last months figures were revised as well, and whereas last month there was the estimation that the trend growth in hours worked had fallen, now we see a much different picture – an increase of .13% in February (and in seasonally adjusted terms a 0.7% increase in hours worked!)

The growth in hours is modest historically… and well that’s about all you can say about it. I’d like to get more excited, but I’ll go with suggesting this month that the trend really is your friend. 

The good thing about the figures as well is that both full-time and part-time employment increased. Here though, we see the seasonally adjusted figures a bit more calm than the overall numbers, and the trend rate still showing negative monthly growth – a good calming statistic for those thinking boom time is here again.

As a  result we see the unemployment rate of those looking for full-time work stabilizing with the overall rate, and both are down from the peak they were at 6 months ago:

The good news as well is that the employment growth has occurred for both men and women, but the growth in male employment does seem to have faltered a touch (but that’s really suggesting a bit more of the data than it is saying – it is pretty steady):

And we also see the unemployment rate stay steady for both

The number jump around again with the employment to population ratio – which remains flat at 61.6% in trend terms, but went up 0.3 percentage points in seasonally adjusted terms. Again, all good, but I’m sticking with the trend this month:

Now to the states, and here’s where we really see some weird things.

I‘m not a big fan of state seasonally adjusted numbers, because you see really bizarre things like the numbers we have for Tasmania:

The trend figures se Tasmania going from best to worst, and conversely, instead of QLD being the only state to decline , it becomes the biggest growing state!

So I’m calling a time out and saying, things look too weird for me. So let’s look at the annual figures to take a chill pill, and get some figures that make sense:

And now to the impact of each state on the national unemployment rate:

Queensland has improved from being far and away the worst state, to now tying with Victoria.

So in terms of drag on the unemployment rate, QLD and Victoria are both costing the nation about 0.1 percentage points on the national

So to recap. Big employment growth number in seasonally adjusted terms, but I think it’s safer to focus on the trend numbers, and also on the unemployment rate. Sure we had a big boost in employment, but the unemployment rate has remained steady, and I think that reflects how the economy is going quite accurately.