On the face of it, the Australian economy has again shown its resilience with the unemployment rate last month steady on 5.8%, where it has been since June.
But in keeping with the flow of recent figures, August’s labour force numbers from the Australian Bureau of Statistics this morning told a different story, once you looked under the headline rate. It’s a story that will help the Rudd Government reinforce its message that stimulus spending has to be continued for a while yet.
It’s also an outcome that will push any move from the Reserve Bank to lift rates back to November-December, or even to February, if September’s employment numbers are again weak in a month’s time.
More than 27,000 jobs were lost in the month, with 30,800 full time positions going and just over 3,000 part time ones being created.
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It is a direct reversal of the July position when a surge in part-time work offset a fall in full time jobs to send total employment up 32,200.
Like retail sales, housing finance, consumer and business confidence and building approvals, plus the trade figures, it’s a very mixed story being told about the state of the economy.
The labour market, like the rest of the economy, hasn’t fallen in a heap. Contrast this with the US labour market, where the August rate is 4 percentage points higher than ours was last month.
But the picture isn’t as confident as appeared in the July labour force figures.
Economists had been expecting a rise in the number of job losses with estimates ranging from around 15,000. The unemployment rate was forecast to edge up to 5.9%.
But that didn’t happen because of a 0.2% fall in the participation rate to 65.1%, the biggest fall for more than a year.
Falls in the participation rate are said to indicate a loss of confidence among people looking for work, so they drop out of the system.
It usually happens when there’s a bit of doom and gloom about, but that’s at odds with the recovery in both business and consumer confidence in the past four to five months; this week saw the NAB’s survey of business confidence report a six year high and the Westpac survey of consumer sentiment reported a two year high.
The fall in the participating rate could easily be reversed in this next month’s report, but it is another sign that the overall economy isn’t as strong as some of the figures suggest, especially the June quarter growth numbers.
It does emphasise however the importance of the spending stimulus which helped the labour market steady from March-April through to July.
In July the ABS reported: that 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.” And 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.”
This morning it reported that in August, “employment decreased by 27,100 to 10,763,600. Full-time employment decreased by 30,800 to 7,553,800 and part-time employment increased by 3,800 to 3,209,800.
“Unemployment decreased by 2,100 to 663,600. The number of persons looking for full-time work decreased by 8,800 to 488,100 and the number of persons looking for part-time work increased by 6,600 to 175,500.
“Aggregate monthly hours worked decreased 4.0 million hours to 1,507.7 million hours.”
And the labour underutilisation rate, seasonally adjusted “increased 0.1 pt to 13.6%. The male labour force underutilisation rate decreased 0.6 pts to 11.9%, and the female labour force underutilisation rate increased 1.0 pt to 15.5%.”
That fall in hours worked is another sign that underlying demand in the economy remains weak a sit reflects the loss of jobs in the month, and the cutting of work hours for those still in employment.