Labour Force Survey — July | By the numbers
- Employment increased by a net 41,100 in seasonally adjusted terms, which was well in excess of the median forecast for +14,000. June's initially reported increase of 500 was revised to show a decline of 2,300.
- The national unemployment rate was unchanged at 5.2% matching the consensus forecast.
- The underutilisation rate lifted from 13.4% to 13.6% and the underemployment rate deteriorated from 8.2% to 8.4%.
- The participation rate lifted by 0.1ppt to a new record-high 66.1% (exp: 66.0%).
- Aggregate hours worked increased by 0.5% in the month (prior 0.0%) to 1.78bn hours to drive the annual pace up to 2.0% from 1.5%.
Labour Force Survey — July | The details
Taken at 2 decimal places, the nation's unemployment was 5.23% in July and virtually unchanged from the previous month at 5.24%. The unemployment rate has been drifting higher this year after ending 2018 at 4.98%. In trend terms, the unemployment rate lifted from 5.22% to 5.26% in July (rounded to 5.3% for reporting purposes).
The participation rate remains on the rise, lifting from 65.96% to 66.06% (seasonally adjusted) and from 66.04% to 66.11% (trend). Thus, July saw a new record level for the participation rate of 66.1% for both the seasonally adjusted and trend series moving past the previous highs of 66.0% set in May. In absolute terms, workforce participation increased by 41,900 in July and with employment increasing by 41,100, the number of unemployed was little changed in lifting by 800 to 712,900.
The net increase in employment of 41,100 in the month was split between the full-time segment rising by 34,500 and the part-time space adding the remaining 6,700 jobs. Employment growth through the year lifted from 2.35% to 2.64%, with full-time outperforming at 2.97% (from 2.88% in June) and part-time noticeably softer at 1.93% (but up from 1.24% in the previous month).
Monthly hours worked stabilised in June after back-to-back declines and then bounced by 0.5% in today's report to 1.78bn hours. That saw growth over the year tracking at 2.0% compared to 1.5% in June. Adjusting for the increase in employment, average hours worked per employee in the month lifted by 0.2% to 137.9 hours, though that is 0.6% lower than the level from a year earlier.
Looking at the state detail, there were some volatile changes in the unemployment rates with the moves mixed overall; New South Wales -0.2ppt to 4.4%, Victoria steady at 4.8%, Queensland -0.1ppt to 6.4%, South Australia +0.9ppt to 6.9%, Western Australia +0.2ppt to 5.9% and Tasmania -0.8ppt to 6.0%.
Employment outcomes in July were; New South Wales +13,000, Victoria +3,600, Queensland +19,900, South Australia -1,700, Western Australia -4,200 and Tasmania +1,600. It very much continues to be a two-tiered labour market in Australia, with New South Wales and Victoria leading the way with a considerable gap to the rest.
Labour Force Survey — July | Insights
Not a great deal changes out of today's report. It was encouraging to see employment growth rebounding strongly in the month considering June's weak result and the overall pace remains robust anyway you look at it (2.6% 3-month annualised, 2.4% 6-month annualised and 2.6% year-on-year) continuing to defy expectations for a slowdown. However, with participation in the workforce continuing to move higher spare capacity persists. The underemployment rate (workers who are employed but want more hours) moved up from 8.2% to 8.4% and the underutilisation rate (combining the unemployed and underemployed) increased from 13.4% to 13.6%, while the unemployment rate at 5.2% is well above the RBA's 4.5% estimate for full employment. The chart (below) highlights that limited progress is being made in lowering spare capacity, with each of these key measures essentially tracking sideways and is consistent with yesterday's subdued update for wages growth in Q2 (see here).
