Nothing in the June employment data from the Australian Bureau of Statistics yesterday to change anyone’s mind about the state of the economy – as the Reserve Bank has said, it’s sluggish and operating below trend.
In fact from keeping up with the growth in the potential workforce at best for much of the past year, there seems now to be a slowing underway in jobs growth which could mean a further rise in unemployment in coming months.
At least, that’s what the ABS thinks is happening.
Remember that the unexpectedly strong May numbers (which saw an improbable 42,000 new jobs created, as the jobless rate dipped 0.2 points to 6.0%) was mostly off the back of apparently absurdly positive West Australian data.
The ABS now says that unemployment actually fell even more, to 5.9%, in May. Except then it rose again in June to 6%. So, no change.
The Bureau says that just 7,300 new jobs were created in June, with all of these coming in full time employment (all seasonally adjusted) – full time employment was up 24,500 to 8,156 million people in June and part-time employment fell 17,200 to 3,612 million.
The total number of people employed rose to 11,768 million people. The participation rate increased less than 0.1 points to 64.8% – but the aggregate hours worked total rose 5.1 million hours (0.3%) to 1,636.9 million hours – which is some good news.
At least the problems reported in May in the WA numbers have been sorted out, for now: unemployment is back to 5.8% in the west from 5.1% in May. NSW is up a tad to 5.8%, Victoria flat at 6%, Queensland down 0.2 points to 6.1% (but participation there was lower); the always-volatile South Australian numbers jumped from 7.6% to 8.2%, and Tasmania fell to 6.5%.
Steady employment growth of at least 20,000 a month is likely to be needed for the jobless rate to fall and from January to May, employment grew by an average of 29,000 a month (thanks to May’s rise of 42,000, seasonally adjusted).
But that is a bit misleading at the moment because the trend rate of growth in employment is almost half that seasonally adjusted rate.
At the same time, unemployment dropped from 6.3% in January to 5.9% in May.
That reversed the rise from 5.9% to 6.3% from May 2014 to January 2015. Employment growth over that time averaged only 15,000 a month.
Looking at yesterday’s figures, trend jobs growth has been 16,000 a month so far in 2015 – roughly the same as we saw for the last 8 months of 2015.
That 16,000 rate has to accelerate in coming months if we are to avoid the forecasts for unemployment rising to 6.5% or higher over the next year, which remains a distinct possibility as car workers in South Australia and Victoria are laid off by Ford, Toyota and GM Holden.
