Either this morning’s Australian Bureau of Statistics jobs data for April has some statistical bugs; or the Australian labour market has become even more volatile than ever; or the economy is finding pockets of growth that remain undetected by surveys and anecdotal reports.
Today’s report is much stronger than expected, with more than 50,000 new jobs created (seasonally adjusted). That’s left the unemployment rate at 5.5%, down 0.1 percentage point from the 5.6% reported for March. The reported number of new jobs was well above forecasts from the market, which predicted the jobless rate would remain flat. Some economists expected what they called a “modest” rise after the big fall in March, but nothing as large as the 50,000-plus reported.
The news saw the Aussie dollar jump sharply by more than half a US cent to $1.0250 — which puts in context some of these claims the Reserve Bank is cutting rates for the purpose of lowering the dollar.
April’s strong rise (in both full- and part-time work) totalled 50,100 and followed the loss of 36,100 in March, more than 71,000 new jobs in February and 10,400 new jobs created in January. That means around 95,000 new jobs have been created in the first four months of this year — or an annual rate of more than 250,000, if the trend continues at the current pace. That seems hard to believe given all the talk about a slow economy and growth expected to be under 3% (annual) for 2013 as a whole.
Smoothing out the monthly swings with the trend data, the number of new jobs last month jumped 46,000. From the 11.541 million people employed last December, the trend growth has been 95,000 — or well over a quarter of a million new jobs (annualised). That is not the look of an economy battling headwinds. According to the ABS, the number of people unemployed has risen 29,100 since the end of December last year to 682,100 in April.
Moreover, there was a rise in hours worked of almost 11 million in April (very strong) and a welcome rise in the participation rate of 0.2 to 65.3%. Unemployment was down 0.2 points in New South Wales to 5.3%, on the back of a lift on participation; down 0.3 points in Queensland to 5.6% with no change in participation; and down 0.1 in South Australia to 5.7% with a 0.3 rise in participation. But there was big rise in unemployment in WA, up 0.4 points to 5.2%, albeit with a 0.3 rise in participation, and it edged up 0.1 point in Victoria to 5.8%, again on a rise in participation. Unemployment also went up in Tasmania 0.2 to 7.5%.
So what do we know about the state of the economy? It’s adding jobs, car sales remain solid, house prices are growing (very slowly), retail sales continue to have growth momentum, despite a mixed report in March, the trade account has returned to the black for the first time in a year and consumer confidence remains OK. On the other hand, surveys of manufacturing and construction show low to contracting levels of activity and investment.
Either way, today’s data will now throw into doubt expectations for future rate cuts from the RBA, particularly in June. Indeed, it’s a good question as to whether the RBA would have cut on Tuesday knowing this sort of strong jobs growth had happened in April.