While the headline figures look grim, today’s jobs report for July from the Australian Bureau of Statistics is more evidence that the economy is a bit stronger than it seemed. Seasonally adjusted, the jobless rate rose to 6.3% from the revised June figure of 6.1% (originally reported as 6.0%, and May’s 6.0% was also revised up from 5.9%). There was also a 40,000 jump in the number of people unemployed to a new decade-plus high of 800,700. But 38,500 new jobs created last month, and the rise in unemployment mainly reflects a sharp rise in the participation rate to 65.1% from 64.8% in June.
The rate of building approvals has continued solidly, especially for new private housing. Coupled with low inflation; a surprisingly strong rise in retail sales in July; and near-record car sales, that uptick in jobs seekers in the past month suggests the economy might be growing slower than policymakers want, but is making the transition from the resources boom to a more traditional growth pattern.
According to the ABS, 236,000 new jobs were created from July last year to last month, or nearly 20,000 a month. This has happened at a time when forecasters, from the Reserve Bank, to Treasury, were reluctantly forecasting the unemployment rate to rise and peak around 6.5%, or perhaps as high as 6.75%, before starting to fall in 2016. In July of last year the jobless rate was 6.4%, against the latest reading of 6.3%. The one real negative was that the seasonally adjusted monthly hours worked in all jobs series fell last month by 3.4 million hours (0.2%) to 1.6 billion hours.
New South Wales, Victoria and Queensland all had rises in unemployment — 0.4 points in both Victoria and Queensland — but NSW and Victoria also experienced big rises in participation. In Western Australia, where the numbers have been all over the place, unemployment jumped 0.5 points to 6.4% — the first time the west has been above the national average for a long time. How reliable the numbers are is an enduring question. As is now common with the jobs data, there are some extraneous factors influencing the data. It is very possible that both the 38,500 new jobs and the rise in the number of people unemployed could be revised down next month when the Bureau reworks its estimates to take account of lower than expected population growth. It’s the first time the jobless rate around 6.3% since January. The ABS warns that figure should be treated with caution; sampling error means it can only be confident the true rate is somewhere between 6.2% and 7%.
But even accepting the statistical noise, the jobs market continues to confound the experts and doomsayers — including the industrial relations hair-shirt types like former BHP chairman Don Argus, who was spouting more nonsense about industrial relations reform today in The Australian Financial Review. Argus simultaneously called for a “rational debate” and warned if that workplace reform didn’t happen Australia could end “finishing up like Greece”. And the head of mining peak body Australian Mines and Metals Association Steve Knott, managed to also call for a “reasoned debate”, but promptly dismissed the Productivity Commission’s draft report out of hand because it didn’t call for the WorkChoices-style complete overhaul of IR that mining companies want.
You can have a rational debate, or you can invoke Greece, and dismiss extensive, careful reviews by independent, hardheaded economists. You can’t do both. And as the continuing performance of the labour market suggests, the evidence for the need for an IR revolution is thin on the ground.
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