Australia’s Unemployment Rate steady at 5.7%

Today the ABS released the latest labour force numbers. I haven’t done a full post on the number for a couple month due to the election, so let’s have a look and see how we’re doing.

First off, the numbers scream “ignore the seasonally adjusted rate”. On seasonally adjusted terms the unemployment rate in September actually fell from 5.8% to 5.6%.

But come one. Really? Maybe it’s the big turn around, but given the IMF on Wednesday thinks we’re looking at a 6.0% unemployment rate next year (and Treasury is gloomier still, thinking 6.25%) I’d bet no.

In trend terms – which is always much better when it comes to comparing changes from month to month, it stayed flat at 5.7%.

And anyway if we get down tot he nitty gritty, the seasonally adjusted figure in August was 5.7647% so it only just got rounded up to 5.8%, and September’s number was 5.6479%, so it only just got round down to 5.6%. Thus while it looks like a 0.2 percentage point drop it’s really only a 0.12 percentage point drop.

So I’m going with the 5.7% flat rate as more believable.

OK, the 5 year picture:

We’re not quite back to where we were during the GFC, but the path back to 6.0% has been pretty steady since mid 2012.

So let’s go in for our 18 month close up:

A steady rise, but and ever so slight suggestion of a plateau. I think that plateau depends a fair bit on whether or not this month’s figures get revised a bit next time round.

But that’s the big number, let’s flip open the hood and have a bit of a squirrel around and see what is really going on.

First, monthly employment growth:

There was an increase of 9,100 jobs in seasonally adjusted terms, but employment actually fell in trend terms:

Either way, it’s pretty soft (and by soft I mean fricken weak) as the annual employment growth rate really shows:

The hours worked measure is also interesting. In seasonally adjusted terms it fell (even though the amount of jobs increased). But in trend terms it has been increasing for the past 12 months:

This translates into an annual increase in hours worked that seems a bit at odds with the employment picture:

But it makes more sense when we look at what has happened with both over the past few years:

Here we see is that in 2012 hours were cut back, but employment continued to grow – through hours of full-time work being reduced, and/or the growth in part time work exceeding full time work. It is not too bad a thing really – much better for hours to fall than for total jobs to – it is always easier to increase hours than to go from no job to a job (and also a sign of a nicely flexible IR system).

Now we see a bit of a counter balance. Clearly the economy is not going gang busters, but where work is able to be increased it is being increased through either shifting part-time workers to full-time, or increasing the hours of full-time workers.

I would suggest the space between the total employment growth line and the hours worked bars from June 2012 to July 2103 exhibits a lot of spare capacity in the labour market of those already employed.

I would suspect that the hours worked growth will need to stay above the employment growth for a few more months before we have any chance of seeing a good increase in employment.

As a result the Hours worked per employed has now risen for the past 6 months, but is still well below pre-GFC levels:

So there is some employment growth but not much, and what there is, is mostly part-time

But even the part-time employment growth is slowing as can be seen pretty starkly when we compare monthly full-time and part-time employment growth:

Not surprisingly the unemployment rate of those looking for full-time work remains well above the total rate:

The gap has narrowed a bit, but looking back over the past 10 years, we see the gap is as big as it has been outside the GFC period:

The Participation Rate has received a fair bit of attention today, and not surprisingly because it has rather dived in the past few months:

Now it is always worth remembering that the participation rate can fall for a couple reasons. The first is the most obvious – people have given up looking for work. But the second is why they have done that. For some it is due to despair, for other it is due to age.

The ageing of the population remains with us, and I seriously doubt we’ll see a participation rate ever again at the near 66.0% that it reached in late 201o.

Indeed a look at the past 20 years suggests 2008-2012 was a abnormal level rather than the expected to be norm.

One thing to note is that since November 2010 the total participation has fallen 0.8 percentage points, but the 15-64year old participation rate has only fallen 0.3 percentage points in that time.

People are getting old, more than people are getting discouraged. For a better look at the ageing dynamic, Matt Cowgill has some excellent graphs on it all. My very quick and dirty look at the impact of the ageing of the population is to compare the change in the total employment to population ratio and that of 15-64yo since April 2008 (the peak level).

While during the GFC the both rates fell and rose around the same, since the end of 2010 the total rate has fallen faster. And as we know 2010 minus 1945 is 65 – or the beginning of the retirement age for baby boomers.

(I really should use the 25-54 age bracket, as what we’re also seeing now is that 15-24yo are staying in school/uni/TAFE more than they sued to, which is also reducing the total rate somewhat).

OK, now onto the growth of employment for men and women. Usually I look at total employment, but let’s just look at full-time work:

For the first time since the GFC period, annual male full-time employment fell in the past 12 months. While full-time employment for women is holding up, growth has moderated in the past 12 months.

Not a really wonderful picture of economic health. Yes the unemployment rate went down, but let’s not get too excited, when full-0time work numbers start picking up, then we can begin to say the corner has been turned.

Wages Breakout (or lack thereof) Graphs

My Guardian Post today is on the wages breakout claims by Eric Abetz.

I’m putting some graphs here because they couldn’t all fit in the post.

Australia’s GDP grows by 0.6% in March, 2.6% for the past year

First the obligatory, “less than analysists” expected sentence.

OK. Now onto the data.

Yep, the ABS in the midst of the quarterly economic nerd week, released the national accounts today. Growth was below trend. Even trend growth was below trend.

Where do we find ourselves? Well first let’s look at the quarterly growth picture:

In March I noted that “4 of the past 5 quarters have had growth below the 10 year average”. That stays the same by virtue of the September 2012 growth figure being revised up from 0.65% to 0.76%. Incidentally the March 2012 growth figure, which came out at 1.3% and which received a fair bit of derision, seems to have settled at growth of 1.24%.

So the past 18 months have been more below average than good. And this month’s figures were a decline in annual terms due to that nice March 2012 growth  no longer getting counted in the annual figures:

This quarter at least we saw a slight return to normal in terms of the GDP deflator. Unlike the past 3 quarters which has the implicit prices used to calculate the GDP declining in annual terms, this quarter shows the GDP deflator increasing by as still next to nothing 0.5%

If we go in for a closer look on a quarterly basis we see this:

Clearly inflation is not a problem at the moment.

So how does that flow through to the latest buzzword in economic reporting, Nominal GDP?

Well the is an improvement, but geez it is still a long long way below average:

As Wayne Swan lies in bed at night wondering of the surplus that might have been he must surely look at that period from March 2003 to Dec 2008 when nominal GDP growth averaged 7.9%.

Annual real GDP growth from March 2009 is around 25% less than it was from 2002-2000, but average nominal GDP growth has fallen by around 40%:

OK. Terms of trade, how’s the boom going?

First the long term picture:

There was a little, little increase in the March quarter. Let’s go in for a close up, which shows the boom as less of a bust than a slight falling off:

Is that a truer picture? Not sure to be honest.

OK. Onto productivity.

This quarter showed a slight slowing of growth in annual growth in both trend and seasonally adjusted terms. This wasn’t surprising because the March 2012 quarter had shown very strong growth of 1.9% in seasonally adjusted terms. In the March 2013 quarter productivity grew by only 0.4% in trend terms and not at all in seasonally adjusted terms.

Annual productivity growth in trend terms remains nicely above the 1997-2007 average, but no time to get complacent (or to suggest the unions and the Fair Work Act are killing the economy).

Indeed the 5 year rolling growth chart shows since 2009 there’s been a good turn around in the declining growth of productivity:

Further to the “unions are in charge and destroying everything” narrative, there are the labour costs figures.

Real unit non-farm labour costs fell in the March quarter by 1.5% in seasonally adjusted terms.

Long time readers would note that I have been of the view that the reason behind the increase in unit labour costs during 2010-2012 was off the back of the GFC, which saw labour costs plummet faster than they had been. My view has been that we’ll get back to the pre-GFC trend of declining real unit labour costs once both the GFC and the reaction washes out, and this does seem to be the case. In essence, let’s cut the bull about the Fair Work Act raising labour costs.

Heck let’s look at nominal unit labour costs, because they are what the RBA looks at to see if labour costs are putting a spur to inflation:

Yep, nominal unit labour costs fell by 0.6% in the past year.

The household savings ratio shows that we’re quite happy it seems to save around 10% of our income.

Finally, on a national level, let’s look at the break down of national income among employees and companies.

After a bit of a jump last quarter, the employee share of total factor income stayed flat this quarter:

The corporations profit share of total factor income rose 3.7% in seasonally adjusted terms, but in trend terms it was pretty flat:

The increase in seasonally adjusted term might be good for tax revenue as we head towards the Pre-election Fiscal Outlook – as to might the slight increase in nominal GDP growth.

Now to the states.

Oh Western Australia, we hardly knew you:

Look, despite the usual caveats about state final demand not being state domestic product, it’s clear the peak of the mining capex has had an impact on WA. That doesn’t mean it’s in recession, but it is certainly off the boil (especially when you look at its employment growth situation).

Let’s look at it in annual terms, to clear out a bit of the quarterly variations:

WA’s annual SFD growth is now only just above that of QLD and NSW. (And yes, Tasmania is in a recession, let’s not beat around the bush). But while NSW has been kind of at a plateau, QLD continues its downward path.

How does the WA picture look in historical terms?

As you can see the last time WA’s annual SFD growth was this low (outside of the GFC) was prior to the mining boom.

Of course the non-mining states are meant to pick up the slack. Over to you Victoria:

As you can see, in the past 25 years there’s only been 2 other periods where Victoria’s SFD growth is negative – the 1990s recession and the GFC.

That is not a pretty picture.

Tomorrow the labour force figures. I predict not much joy there either.

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.