Too early to rejoice over jobs
The unexpectedly strong growth in jobs in February could be the start of a recovery after two years of weak jobs growth. Or it could be just a false signal. Time will tell.
At face value, the seasonally adjusted figures reporting 71,500 new jobs chime with the robust rebound in consumer confidence, and the early signs of green shoots in housing and retail sales, as you might expect after a sustained fall in interest rates.
But when the same indicator showed only 32,000 new jobs created in the previous eight months, we need to be wary of taking month-to-month changes in employment too literally. And this time there are strong reasons to be very wary.
Every month the Bureau of Statistics changes one-eighth of the households it surveys. In February the new households sampled turned out to be an unusual group, with a very high number of them in work. That change in sample alone accounted for roughly half the growth in employment.
The Bureau keeps telling us to stop focusing on the seasonally adjusted figures. Its best information on what is really happening in the labour market is in its trend estimates.
For months, the trend figures have told us that the labour market was really stronger than the seasonally adjusted imply. Now they warn us that it’s not as strong as February’s headline figure implies.
On the trend figures, Australia has added 135,000 jobs in the past year, of which 75,000 were in the last six months - roughly 12,500 a month.
Most of them are part-time. In the past six months, on the trend figures, we have added 2500 full-time jobs and 10,000 part-time jobs a month - while the population 15 and over has grown by almost 30,000 a month.
Unemployment on the trend measure has edged up in the past year from 5.1 per cent to 5.4 per cent.
It could be that the slow jobs growth of 2011 and 2012 has now finally begun to change. We’ll know that if we see several months of strong jobs growth. We can’t tell that from these figures.
What we can tell is something important: the jobs markets around Australia are starting to even out. The resource boom states are getting worse. The non-resource states, if not getting better, at least seem to be stabilising.
- Western Australia’s jobs growth appears to have halted. Even on the smoother trend figures, it added just 5000 jobs in the past three months, compared to 24,000 in the same months a year ago. Trend unemployment has climbed from 3.7 per cent in June to 4.4 per cent in February. The resources boom has plateaued.
- The ACT, which for years had had the lowest unemployment rate in the nation, has lost that title with the Gillard government’s budget cuts driving unemployment up from 3.5 per cent to 4.6 per cent in the past year. Job growth has ceased in Canberra, as it has in the Northern Territory, but with unemployment - excluding Aboriginals in community welfare schemes - at a healthy 3.9 per cent.
- New South Wales put on 15,000 new jobs in the past three months, the most of any state, although few of them were full-time. Trend unemployment is 5.2 per cent, the second lowest of any state.
- Queensland put on 12,000 new jobs over the quarter, but in net terms, all of them were part-time. Full-time employment is still where it was a year ago. Unemployment has edged back from 6.1 per cent to 5.8 per cent.
- Victoria is becalmed. In trend terms, it added no jobs in the past three months, which at least is an improvement after it lost 7000 in the previous three months. Full-time jobs are still plunging, down 10,000 in three months. Unemployment is stuck at 5.7 per cent.
- Tasmania’s jobs market is also flat, with unemployment stuck at 7.1 per cent and a net 7500 full-time jobs lost in the past two years – one in every 20 full-time jobs. South Australia however has started to add jobs again, although unemployment has edged up to 5.9 per cent.