As was to be expected, the Aussie dollar’s fall was choked off yesterday by the very strong jobs report from the Australian Bureau of Statistics for August which once again has raised more questions than it has answers.
The currency jumped from around 91.60 USc before the 11.30 am release, to around 92c. It eased in afternoon trading as more and more analysts questioned the report’s accuracy.
The currency rose because the silly billy traders in that market (along with the henny pennys in the sharemarket) reckon the better than expected jobs data will see the Reserve Bank pushing up rates sooner rather than later.
Well, no – the RBA will look at other indicators and will also look for signs of stability in what have been two volatile months of jobs data.
The only point to be made here is that sometimes the jobs market becomes volatile and confusing when it is transitioning from growth to a slide, and from a sluggish, low growth state, to a faster rate of improvement. But those moments are only discovered in hindsight.
The August report saw the surprising 12 year high in the unemployment rate of 6.4%, reported in July’s jobs report, reversed completely – with the rate falling back to the 6.1% rate in June.
The ABS report for August, released yesterday also showed the largest monthly rise in new jobs ever recorded – 121,000, seasonally adjusted, and exceeding the shock 71,000 new jobs in February 2013.
The Bureau said the surge in employment was driven by increased part-time employment for both males (up 65,400 persons) and females (up 41,300 persons).
In trend terms, which is designed to smooth out big rises and falls, the number of people employed increased by a solid 18,700 last month.
The seasonally adjusted labour force participation rate jumped sharply, by 0.4 percentage points to 65.2% in August 2014, which was a much larger movement than we have seen for quite some time.
Another factor underlining the oddness of the August report was that number of extra hours worked seems too low for the 121,000 new jobs created in the month.
In that and other facts in the detail of this report raises as many questions about what was being measured and reported as did the controversial July report.
More questions than answers in jobs data
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The July report included the usual monthly change in the panel ‘rotation’ as the ABS calls it – it also included a change in the way people looking for work was measured, without any control survey to check for accuracy. That helped push the jobless rate up to the 12 month high of 6.4%.
The August report contains a new panel ‘rotation’ which seems more biased towards part-time employment than previous panels for recent months.
As a result, there’s a surprisingly huge rise in the number of new jobs and part time jobs especially – 121,000 all told. Another surprise is the larger than usual 0.4% rise in the participation rate which seems to have resulted from the bias to part-time work (and the 106,000 extra jobs) in the new panel rotation.
And those new jobs – 106,000 part time and just over 14,000 full time – seem somewhat unbalanced given the amount of hours worked rose by the smallest amount measurable.
The ABS said, “Aggregate monthly hours worked increased 0.1 million hours to 1,609.5 million hours". The trend rise was only 3.2 million hours. Both seem too small, unless the part time jobs were only for a few hours, or a lot of full time employees had their hours reduced.
The tone of the August report is more in keeping with the August job ads survey from the ANZ Bank on Monday which showed the number of jobs advertised online and in newspapers rising to a 17 month high, which indicates the demand for new labour is rising more strongly than indicated by recent ABS reports. But many economists suggest it is too good to be believed.
The seasonally adjusted number of people unemployed fell 33,500 to 755,100 in August. That was either as a result of more jobs being created (and looking at the number reported, that’s possible, or it’s as a result of people stopping looking for work).
In a commentary in yesterday’s report, the ABS attributed the sharp rise in part time employment to the nature of the replacement panel for August.
"The incoming rotation group reported a higher proportion of part-time employed persons than the rotation group it replaced, and contributed 47,000 to the increase in part-time employment. (However, the incoming rotation group contributed a decrease of 50,100 in full-time employment.).
"Householders who responded in both July and August 2014 (called the matched part of the common sample) reported a net weighted increase of 82,000. For further details see ‘About the data’. Similar patterns in gross flows were observed across most age groups. The increase in part-time employment was observed in all states and territories except the Australian Capital Territory," the ABS said.
Sounds confusing and more than a bit odd. Given that, it wouldn’t surprise to see a fall in part time jobs in coming months, and more volatility in the jobless rate as the figures re-adjust to the realities of a still sluggish labour market.
Unemployment rates fell in all states in August, declining to 5.7% from 5.9% in NSW.
In Victoria unemployment eased to 6.8% from 7%, it fell to 6.7% from 6.8% in Queensland and tumbled to 5.9% from 7.2% in South Australia, which does seem odd as well.
The rate was down to 5% from 5.2% in Western Australia and dropped to 7.1% from 7.6% in Tasmania, which was also a larger movement than normal.
In the Northern Territory the jobless rate rose to 4.6% from 4.3% and was up at 4.8% in the ACT from 4.6%.
