October jobs data shows the economy isn't faltering, even if we treat the ABS's numbers with caution, Bernard Keane and Glenn Dyer write.
With talk of economic misery abounding, this morning's jobs report from the Australian Bureau of Statistics will have the gloomsters rattled. There's no evidence of a worsening in the jobs market from the October labour force numbers
, which showed a steady unemployment rate of a seasonally adjusted 6.2% off a flat participation rate (from 64.5% in September to 64.6% in October). The number of people employed increased by 24,100 to 11,592 million in October. The increase in employment was driven by increased full-time employment for both women (up 26,100) and men (up 7,300), partly offset by a fall in part-time employment, down 9,400. Normally, that suggests a labour force slowly improving, especially when allied with a sharp rise in the number of hours worked -- nearly 25 million in October. On a trend basis, the jobless rate was steady at 6.2%, as was the trend participation rate at 64.6%.
The October report was the first from the ABS with its new method of seasonal adjustment after the problems of mid-year. Figures for September and back to late last year have also been redone by the ABS using this new method of adjusting for seasonal factors, and data all the way back to 1978 will be changed over time.
But the steady overall numbers masked some wild gyrations at the state level. NSW and Victoria were both relatively flat: NSW unemployment is down 0.2 points to 5.7% seasonally adjusted, but that merely restores the state figure to its level since May; participation there was up 0.1 points to 62.9%. Victoria was flat at 6.8%, and participation was also unchanged at 64.6%. But the smaller states (with smaller sample sizes) saw much bigger swings. Queensland saw a surge in unemployment, up 0.7 points to 7%, its highest level seasonally adjusted since 2003, although participation rose 0.2 to 65.5%. But the number of unemployed in Queensland is now the highest ever, at 175,000 seasonally adjusted (the trend figure, 169,000 is also the highest ever). Tasmania, in contrast, saw a 0.7 point fall in unemployment, to 6.9%, barely above Victoria's level, with participation steadyish at 61% (down 0.1%). South Australia is flat at 6.7% off slightly lower participation, while the west is up 0.2 points to 5.2% off a healthy 0.5 point lift in participation.
In other data, car sales figures for October as reported by the industry fell 1.5% to 91,236 from October 2013. Despite that, sales are on track to top 1.1 million for a third year in a row -- a sign of solid consumption, with private sales and government purchases still positive for the year so far.
On Tuesday, retail sales rose a seasonally adjusted 1.2% in September (which seems a bit steep compared to the 0.1% rise the month before), while the trend rate was up 0.3% for a third successive month. Volume growth in the quarter was a solid 1% and economists expect retail sales to make a small positive contribution to third quarter GDP growth. They also expect trade to make a small contribution thanks to rising export volumes, especially of iron ore, despite falling prices and a sharp rise in the size of the trade deficit.
All of which suggests the Hanrahans and Henny Pennies will have their work cut out trying to find some evidence for their dire predictions. US investment bank Morgan Stanley joined their ranks yesterday
, forecasting tough times ahead for the Australian economy with unemployment rising to 7%, growth slowing, inflation falling and another rate cut from the Reserve Bank. The r-word even got a look-in, with the screen jockeys predicting a recession if there wasn't more stimulus applied to the economy. Don't get too worried -- in 2008, Morgan Stanley said Australia would go into recession
and house prices would halve
. Bad news always sells better than good, of course, but at the moment the economic data isn't giving any substance to the bleak outlooks being peddled by some.