Home News Australia’s Unemployment Rate Slips to 5.6 Percent in July 2017

Australia’s Unemployment Rate Slips to 5.6 Percent in July 2017

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Written By: Richard Koch – Forex Focus

The seasonally adjusted unemployment rate declines after an upward revision in June.

The seasonally adjusted unemployment rate in Australia came in at 5.6 percent in July 2017, following a moderate upward revision in the June numbers from 5.5 to 5.7 percent. The unemployment figures reported by the Australian Bureau of Statistics (ABS) were in line with market expectations and have remained robust in the 5.5-5.7 range for the last four months, after peaking at 5.9 percent in February and March 2017. Compared to the previous year, the unemployment rate was down 0.1 percent. The unemployment rate measured by trend estimates was unchanged at 5.6 percent compared to the June numbers, slipping 0.1 percent year-on-year.

The seasonally adjusted evaluations are arrived at by discarding seasonal patterns from the original assessments, while trend estimates are measured by smoothing out the more volatile seasonal numbers and are widely used to measure the behaviour of the labour market.

Following are the key highlights of the seasonally adjusted and trend estimates of the unemployment numbers for July:

Seasonally adjusted: 

  • The number of persons finding full- and part-time employment rose by 27,900 compared to a month earlier.

  • The labour force comprising full-time employment decreased by 20,300 compared to the earlier month, while part-time employment increased by 48,200 during the same period.

  • The number of unemployed workforce increased by 1,100 to 730,600—with the number of unemployed persons looking for full-time jobs falling by 3,800, while those looking for part- time jobs rose by 4,900.

  • Monthly working hours for all categories of workforce dropped by 0.8 percent.

  • Participation rate, which measures the number of people employed or unemployed in an economy, registered a small rise of 0.1 percent in July.

Trend analysis: 

  • The total workforce employed rose to 12,196,900 following the addition of 26,000 personnel in July.

  • Full-time employment grew by 29,000, while part-time employment declined slightly by 3,000.

  • The number of unemployed workforce decreased by 1,800.

  • Monthly working hours increased 0.3 percent in July, slipping by 1.8 percent from June.

  • The rise in participation rate was similar to the seasonally adjusted numbers.

Source: ABS

According to the ABS, the seasonally adjusted full-time employment count increased by 197,700, while part-time jobs rose by 41,600 since July 2016. The employment-to-population ratio, which measures the percentage of employed population above the age of 15, rose 0.1 percent to 61.4 percent in July, following a growth of 0.2 percentage points year-on-year.

The monthly trend analysis of full-time jobs increased for the 10th month in a row with 220,000 people employed since September 2016, accounting for a major portion of the 250,000 rise in the employment numbers. Looking at the year-on-year figures, trend employment increased by 259,000, a rise of 2.2 percent for the year. The employment-to-population ratio rose to 61.4 percent, recording a growth of 0.4 percent during the year, the highest since April 2013.

The labour force, which is the sum of the total number of employed and unemployed persons, grew at 2.1 percent during the year, higher than the rise in the civilian population, which registered a growth of 1.6 percent during the same period.

The rise in trend employment in July was seen across the country, with the exception of the Northern Territory. The largest increase in employment was recorded in New South Wales and Queensland, which also reported the largest employment numbers in seasonally adjusted terms. However, the participation rate in Southern and Western Australia declined by 0.2 and 0.3 percent respectively.

It’s not all good news for the labour force in Australia. While the employment rate has witnessed robust growth, wage growth, especially for private-sector employees, was at record lows. Seasonally adjusted wage growth increased by 0.5 percent in the quarter ending June 2017 and 1.9 percent over the past 12 months. Wage growth in the private sector rose by 0.4 percent compared to a 0.6-percent increase in public-sector enterprises. 

The wage-growth rate in Australia is a measure of the change in hourly rates paid to employees excluding bonuses.

Source: ABS

With consumer inflation in Australia at 1.9 percent year-on-year, the real wage rate, especially for the labour force employed in private-sector enterprises, is in the negative territory, as wages increased by 1.8 percent in the quarter ending June compared to the 2.4-percent rise for employees in the public sector. The minimum rise in wages was seen in the mining sector at 1.1 percent, and the maximum wage increase was recorded in the healthcare and social-assistance sector, with wages rising by 2.6 percent. Territory-wise, wage growth in Western Australia was the lowest at 1.4 percent, offsetting the 2.1-percent growth seen in the northern and southern regions.

According to the chief economist of the ABS, Bruce Hockman, “The low wages growth reflects, in part, ongoing spare capacity in the labour market. Underemployment, in particular, is an indicator of labour market spare capacity and a key contributor to ongoing low wages growth.”

Compared to the other developed economies, wage growth in Australia is the highest after the United States and the United Kingdom.

 

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