Volatility was evident in the ABS’ Labour Force Survey for July, however underlying conditions in Australia's labour market remained broadly unchanged.
Labour Force Survey — July | By the numbers
- Net Employment fell by -3,900 in July — the market forecast was for +15,000. June’s initially reported increase in employment of +50,900 was upwardly revised to +58,200
- Unemployment rate eased to 5.32% from 5.35% (market f/c was 5.4%)
- Participation rate decreased -0.14ppt to 65.54% (prior 65.68%)
- Hours worked lifted +0.2%m/m, increasing to the annual pace to +2.3%
Labour Force Survey — July | The details
Volatility was a theme throughout these data for July. On a seasonally adjusted basis, full-time (FT) work increased by +19,300 but that was eclipsed by a decline of -23,200 in the part-time (PT) segment. The net result was that headline employment fell by -3,900.
Given this, it may have appeared odd to see the ABS report a decline in the national unemployment rate, from 5.4% to 5.3%. However, while employment fell -3,900 in the month, the detail revealed a larger decline in the size of the labour force of -9,600, so as a result, the total of unemployed fell by -5,700. Rounding was also a factor — if taken at 2 decimal points the unemployment rate was essentially unchanged at 5.32% compared to 5.35% in June.
Somewhat strangely, hours worked in the economy lifted +0.2% in July, which increased growth over the past year from +1.7% to +2.3%. Across 2018, though, growth in hours worked has been gradually trending lower.
The pace of employment growth has been easing in 2018, and July's result saw this trend continue with annual growth now at +2.45%. In this cycle, employment growth looks to have peaked in January at a touch above +3.5%. As of July, growth in FT work lifted to +2.3%Y/Y and PT fell by a sizeable -2ppts to +2.7%, although the latter is highly volatile.
Overall, the pace of employment growth is still solid and remains above growth in the working-age population (around 1.6%Y/Y). This dynamic continuing is key to reducing excess capacity in the labour market.
Looking across the states, as the chart, below, shows, the overall change in employment was dominated by movements in NSW (-27,100) and Victoria (+29,400). There were only marginal changes in the other states.
There were some more notable moves, though, in state unemployment rates in July; Victoria -0.6ppt — to a 6.5-year low of 5.0% and a sharp -1.2ppts over the past year, while Tasmania (+0.5ppt) and South Australia (+0.03ppt) went the other way. The unemployment rate in NSW edged up to 4.9% but is little changed over the past 3-months and year.
State Unemployment Rates (sa, based on ABS 6,202.0)
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NSW
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VIC
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QLD
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SA
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WA
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TAS
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July
m/m change
3-mth change
Y/Y change
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4.9%
+0.2ppt
0.0ppt
-0.1ppt
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5.0%
-0.6ppt
-0.1ppt
-1.2ppts
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6.1%
+0.1ppt
-0.1ppt
0.0ppt
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5.7%
+0.3ppt
+0.1ppt
-0.5ppt
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6.0%
-0.1ppt
-0.3ppt
+0.6ppt
|
6.4%
+0.5ppt
-0.2ppt
+0.3ppt
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Labour Force Survey — July | Insights
Volatility was elevated in July's data due to factors associated with sample rotation — referring to the methodology the ABS uses in conducting the survey.
For July, the outgoing group had higher participation and employment rates than the sample, while the incoming group had a higher unemployment rate and a lower participation rate than the sample. This explains the decline in employment and participation recorded in July.
Taking last month's outsized gain of +58,200 and July's -3,900, employment averages out at +27,200 per month. The trend data showed employment up by +26,900 in July — slightly stronger than June's +25,000 — while the unemployment (5.4%) and participation rates (65.5%) on that basis were steady.
Overall, after looking through the volatility, underlying conditions in Australia's labour remained broadly steady in July. However, few had forecast a fall in employment for this survey, and given that employment growth is easing, outcomes of this nature in the coming months would give cause for concern.