Date: November 08 2012
As usual, the labour force statistics have surprised the tipsters – forecasting the employment numbers is about as easy as picking the Melbourne Cup winner – but also as usual, the reality of the stats is not quite what's in the headlines.
The flighty, seasonally adjusted numbers suggest quite good full-time employment growth of 18,700 last month which, along with a little dip in the participation rate, saw the number of unemployed fall by 8800 and the rounded-up unemployment rate remain steady at 5.4 per cent.
But a deeper reading of the figures suggests the labour market remains soft (the same-old same-old) thanks in part to Australians becoming more productive – making more in fewer hours. And the outlook remains that the Treasury and Reserve Bank forecasts of a 5.5 per cent unemployment rate remain on-track.
The calmer Australian Bureau of Statistics trend series recorded milder employment growth of 2400 in October, a 5700 increase in the ranks of the unemployed, and the unemployment rate rose a notch to 5.4 per cent, despite the participation rate easing a tad — although both of those movements were little more than rounding effects.
What has been happening long enough now to be called a "trend" is that our total hours worked have gone flat, despite employment growth. The trend hours worked figure has been 1621-point-something million for three months in a row, and it's down half a per cent from this time last year.
It might seem perverse, but that means our much-debated productivity has improved – we're producing more in fewer hours and productivity is actually running a bit above its recent average. Praise the Lord and pass the next economic cliché.
If that productivity growth is maintained and population growth is rising again, the labour market has little hope but to remain the way it is: soft, but hardly disastrous — except for those having difficulty finding a job. And remember that the RBA is relying on a soft labour market to keep inflation, and therefore interest rates, down.
Noted Governor Stevens on Tuesday: "With the labour market having generally softened somewhat in recent months, and unemployment edging higher, conditions should work to contain pressure on labour costs in sectors other than those directly affected by the current strength in resources. This and some continuing improvement in productivity performance will be needed to keep inflation low, since the effects on prices of the earlier exchange rate appreciation are now waning."
So with our dollar merely remaining strong, rather than rising, the easy yards are behind us in the inflation containment game.
While the overall employment numbers today are more of the same, they do add to another trend that should be acknowledged for busting a myth. It's been a fairly constant cry from those who don't check facts (or are pushing union membership barrows) that the casualisation of the work force has seen full-time work prospects suffer at the expense of an explosion in part-time employment.
As the accompanying longer-term graph shows, the past decade has actually seen something of a surge in full-time employment while the growth of part-time employment has been fairly steady.
What's more, the dip in our participation rate tends to be exaggerated by headline-seekers as well. Yes, at today's 65.1 reading, the participation rate is down from a brief peak of 65.9 reached in December 2010, but it's still a healthy couple of percentage points above its norm until participation took off in 2005 and 2006.
For all the usual talk about underperformance, we continue to have an economy that employs more people at higher wages and who are thus empowered to buy more stuff – if they want to.
Michael Pascoe is a BusinessDay contributing editor.
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