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Australia posts more strong jobs data

Photo by Christopher Furlong/Getty Images

Australia’s labour market surprised again in December, topping expectations for the third month in succession.

Over the month employment fell by 966, beating expectations for a reduction of 10,000.

From a year earlier employment increased by 301,341, down on the 344,913 pace seen in the 12 months to November. This equates to an increase of 2.6% from December 2014.

Full time employment increased by 17,559 with males, at 14,546, overshadowing a 3,013 increase for females.

The increase in full time employment was completely offset by a reduction of 18,524 in part time employment. Female employment slid by 10,191, shading a smaller decrease of 8,333 for males.

In absolute terms, male employment increased by 6,213 over the month, offsetting a 7,178 decrease in female employment.

Despite the drop in employment, the unemployment rate held steady at 5.8%, again topping expectations for an increase to 5.9%. Without rounding, the rate was 5.7601%, the lowest seen since October 2013.

A drop in labour market participation to 65.1%, down 0.2% on November, kept the unemployment rate steady despite the fall in employment.

In numeric terms, the size of Australia’s labour force decreased by 11,912 to 12,629,800. Female participation fell by 15,784, contributing to the entire decrease.

With the size of the labour force falling at a faster pace than employment, the number of unemployed fell by 10,947 to 727,484, the lowest level since May 2014.

All of the key monthly figures are found in the chart below. All data courtesy of the ABS.

Following persistent doubts over the reliability of the ABS’ seasonally adjusted data, the statistics agency stated within its labour force report that from December they have “improved the analysis of the relative contribution of the three components of the sample to changes in aggregate employment”.

In an attempt to address the impact of the incoming rotation group in the December survey, the ABS also noted that they “displayed a stronger tendency towards both participation and employment than the group it replaced”, adding “the effect on the estimates of the incoming rotation group having an increased tendency towards participation and employment was partially offset by the incoming rotation group also representing a lower share of the population than the group it replaced”.

It also pointed to the likelihood that January’s employment figure may be strong, following the huge gains reported for October and November. Our emphasis in bold.

“In looking ahead to the January 2016 estimates, it is important to note that the outgoing rotation group in December 2015, which will be replaced by a new incoming rotation group in January 2016, has a relatively low employment to population ratio (59.7% in December),” said the ABS.

“If the new incoming rotation group has an employment-to-population ratio that is more similar to the average (61.9% for all rotation groups in December 2015), or is relatively higher than the average, there is likely to be some degree of contribution to employment growth from this rotation group change“.

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