Jobless numbers no tale of woe

Australia’s unemployment rate rose from a revised 5.9 per cent in May to 6.0 per cent in June, proving that most of the nation’s economists still can’t get jobless figures right.

Although the employment series is notoriously volatile, hence the revised figure for May, it might be more instructive for the economic brains trust to concentrate on some other indicators like the job advertisement indexes, rather than be swayed by the gloom and doom headlines in the media.

The participation rate in June rose from 64.7 per cent to 64.8 per cent indicating that more people are re-entering the jobs market.

Going forward it looks like the market is finely balanced with more workers leaving the mining construction industry as the resources investment boom comes to a close.

The wildcard here is how many operating mines will be forced to shut up shop as the commodity price crunch continues. The jobless numbers for Western Australia, Queensland and now South Australia continue to deteriorate and seem to be sparking a worker migration back to the growth states of New South Wales and Victoria

But overall the jobs numbers aren’t a worry yet and to put them in perspective Australia isn’t traveling too badly. According to Trading Economics, the unemployment rate in Australia averaged 6.90 percent from 1978 until 2015. It reached its an all-time high of 10.90 percent in December of 1992 and a record low of 4 percent in February of 2008.

Overall, the June numbers are encouraging. CommSec’s Craig James says the data shows that jobs are being created, existing workers are working more hours, and more people are finding work.He concludes that much will depend on businesses and consumers gaining confidence and starting to spend more freely in coming months.

In particular the strength in employment continues to be driven by NSW. Since the lows in January over 80,000 jobs have been created across the NSW economy – a result that resonates with the ranking in CommSec’s recent State of the States report. Across the states the unemployment was NSW 5.8 per cent (May 5.7 per cent); Victoria 6.0 per cent (6.0 per cent); Queensland 6.1 per cent (6.3 per cent); South Australia 8.2 per cent (7.6 per cent); Western Australia 5.8 per cent (5.1 per cent); Tasmania 6.5 per cent (7.0 per cent).

According to James, and a number of other economists, the unemployment may have topped out or be close to peaking. If correct any improvement in confidence would certainly give a lift to retail activity and broader economic growth.

The problem remains that job creation is still not growing fast enough to accommodate demands from new workers entering the workforce.

A lift in consumer confidence and further improvement in job ads would indicate a healthier economy and a stronger run for corporate profits in the second half of the calendar year.

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