Australia’s jobless rate steadied at 5.8% last month, raising the thought that the unemployment peak won’t be as bad as forecast.
Thousands of part time jobs were created, leading to a sharp 32,000 rise in the number of people who found work in July.
Figures from the Australian Bureau of Statistics were much better than market forecasts for a rise of 16,000 or so in the number of jobless and an unemployment rate of 6% by some estimates.
Instead, the number of unemployment increased just 800 in the month and a graph of the unemployment rate published with the data now has a noticeable flattening at the top, suggesting the rate could be closer to peaking than previously thought.
For example, the ANZ this week estimated the unemployment rate would peak at 7.5%, with the July rate hitting 6.1%, with 18.000 jobs lost. The federal government and Treasury have a forecast of a jobless peak of 8.5%.
The news will add to suggestions that the economy is better placed than thought, despite this week’s 1.4% slide in retail sales in June.
The trade account did better than forecast in June and the Reserve Bank’s Commodity Price Index for July shows what could be the start of a steadying in the sharp fall in commodity returns this year.
And building approvals are strong, which will deliver another employment boost in coming months.
Some commentators will speculate that the news brings a rate rise closer from the RBA, but that might kill any rebound if introduced too early.
The AMP’s Chief Economist, Dr Shane Oliver said in a comment
"July employment data yet again confounded economists with employment up by 32,200 persons and unemployment stuck at 5.8%.
"This is good news. But it is worth noting that the rise in employment was all driven by part time employment with full time jobs actually falling by 16,000.
"So Australian businesses are still dealing with the economic downturn by cutting back on hours worked as opposed to hefty lay-offs.
"Going forward its likely that there will be a limit to this process and with the slump in job vacancies still pointing to job losses ahead we still see the unemployment rate moving higher.
"However, it’s looking increasingly likely that the peak in unemployment will be around 7%, which is well down on the Government’s expectation for a peak of 8.5% in mid 2011.
"One trend worth noting is the extent to which unemployment is shooting higher in the former boom states of Queensland and WA, in contrast to NSW and Victoria where it appears to be stabilising. “
The continued resilience in the labour market is good news for the Australian dollar and share market and consistent with the RBA’s decision to remove its easing bias on interest rates.
That said, we remain of the view that the RBA will not be rushing into an interest rate hike any time soon given the risk that a premature rate hike could snuff out the economic recovery.
For a rate rise to happen sooner, the improvement last month in the employment market would have to be sustained for several months, and sustained at steadily increasing numbers.
In fact the unemployment rate has muddled from 5.7% down to 5.5%, then up to 5.8% since March of this year.
Some thought the April figure was caused by the smaller sample used by the ABS since last July, but the old sample size has been restored and the unemployment rate is only up 0.1% from March
The ABS said full time employment "increased by 32,200 to 10,793,600. Full-time employment decreased by 16,000 to 7,590,400 and part-time employment increased by 48,200 to 3,203,200."
That figure for part time work is by far the highest every recorded and the first time it has been over 3 million positions.
In fact the number of part time jobs has been running at record levels for the past four months as more employers switch workers to less than full time work rather than sack them.
The ABS said that unemployment "increased by 800 to 664,100. The number of persons looking for full-time work decreased by 4,800 to 495,900 and the number of persons looking for part-time work increased by 5,600 to 168,200."
And the unemployment rate "remained steady at 5.8%. The male unemployment rate increased 0.1 percentage point to 6.2%, and the female unemployment rate decreased 0.1 percentage point to 5.3%."
The ABS also, published a national set of figures for the number of hours worked which showed a small fall in July after a rise in June.
The ABS said aggregate hours worked fell by 0.43% in seasonally adjusted terms to 1515.2 million in July, from 1521.8 million in June.
The trend measure produced by the ABS fell by 0.1% in July, the 12th decline in a row – although it was also the smallest decline in that time.
The aggregate number of hours worked fell by 2.9% in seasonally adjusted terms over the year to July, after rising by 3.8%.
Meanwhile New Zealand’s jobless numbers hit the highest level for a decade in the June quarter.
Figures out yesterday showed the jobless rate increased to 6% from 5% in the previous three months.
Statistics New Zealand said employment dropped 0.4% or abou
