Don’t look to today’s labour force data from the Australian Bureau of Statistics to make the current health of the economy any clearer.
In fact the ‘economy’s is bad’ mob and those who see it trending along, with good and weak bits, will be able to claim something from the figures. But the bottom line is a lack of clarity, so don’t believe anyone who says this adds to pressures for a rate cut. Remember, the RBA cut rates in the December quarter when, as we found out yesterday, growth had slowed.
While January’s release had been emphatic in showing a 46,300 rise in new jobs, and a dip in the unemployment rate to 5.1%, from 5.2% in December, the February figures showed a rise in the jobless rate to 5.2% (so in reality, no change from what reported for December of last year) and a drop in employment of 15,400, all part-timers.
The ABS said the “decrease in employment was driven by decreased part-time employment, down 15,400 people to 3,380,400, while full-time employment remained at 8,063,600. The decrease in seasonally adjusted part-time employment was driven by a decrease in female part-time employment.”
You’ll recall that was behind the fall in employment in December, when fewer-than-expected pre-Christmas jobs in retail opened up.
Seasonally adjusted, the number of people unemployed increased by 16,400 people to 632,200, unlike January when there had been a fall of 15,300. The labour force participation rate decreased by 0.1 percentage points to 65.2%.
There were mixed results among the states. NSW maintained January’s strong performance and stayed level at 5.2% seasonally adjusted, with no change in the participation rate — a good performance from the biggest economy. But unemployment in Victoria rose 0.2% to 5.4%. February was thus the first time since 2006 that unemployment has been higher in Victoria than NSW. Unemployment also rose 0.3% in Queensland, off the back of a big fall in participation, 0.4%. It went up in South Australia, 0.1% to 5.2%, off another fall in participation, but unemployment fell in WA, down 0.1% to 4.0%.
Participation rate is the worry on this front: it’s static or falling.
But the issue even more complicated: the ABS said the monthly aggregate hours worked series showed an increase in February, up 21.6 million hours to 1,616.6 million hours, compared to January when they fell 231 million. So was that more a case of employers and the ABS ‘straightening’ up survey data from both months and reconciling it?
The trend data provided little guidance and if anything added to the uncertainty. It showed no change in the jobless rate of 5.2%, a rise of just 1,100 in the number of people employed and a fall of 1,700 people unemployed. So more confusion. Coming on top of the weaker than expected GDP figures yesterday, all we can say is that the economy is definitely sluggish in places, with jobs growth barely keeping pace with population and work force growth.
But amidst all the data, there are some that will make life more difficult for the business lobby and their media spruikers.
Also out today were industrial disputes data which show that days lost to industrial disputes in the December quarter nearly halved from the September quarter, from 101,000 to 54,000. The rise in industrial disputes has been repeatedly cited as an example of the inflexibility of the Fair Work Act, despite evidence that employers were gaming the FWA mechanisms. Let’s see how the AFR reports that tomorrow.
And yesterday here was some good news in the national accounts — a clear pick up in labour productivity. The broadest measure, GDP per hour worked, rose by 0.4% in the December quarter, as we pointed out yesterday. In the market sector of the economy, where productivity is more easily measured, the rise was a solid 0.6%. Through the year, those productivity growth rates were 1.1% for the whole economy and a respectable 1.8% for the market sector.
It gets even better once the mining and utilities (electricity, gas, water and waste) sectors are excluded. That’s where there’s been heavy investment in recent years without a commensurate increase in output for the time being,
The ABS said trend real unit labour costs fell 0.6% while the trend non-farm real unit labor costs fell 0.8%. That fall in real labour unit costs came despite an 0.9% rise in employee compensation in the quarter (up 7.4% over the year). That came from a 0.3% rise in the size of the workforce and a 0.6% rise in average compensation per employee.
Both of these undermine the incessant whingeing from business and some in the media about poor productivity, regulation and unions driving up wage pressures.
The truth is, slack management, dud boards and companies too intent on short-term profits and not investing for the future have had as much of an impact on productivity as IR laws, red tape or aggressive unions.