Australian unemployment ticks lower

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  • Total employment in Australia fell by around 3,900 in July in seasonally adjusted, missing forecasts for a gain of 15,000.
  • Despite the headline fall, the unemployment rate edged to the lowest level since 2012, due to a decline in the labour force participation rate.
  • Experts said the result shows that the underlying health of Australia’s labour market is still strong, although a return to higher wage growth still looks a long way off.

Australia’s jobs report missed expectations in July.

According to data from the Australian Bureau of Statistics (ABS), total employment declined by 3,900 in seasonally adjusted terms, against a forecast rise of 15,000.

However, taking some monthly volatility into account, the latest data suggests the underlying health of Australia’s labour market remains steady.

The unemployment rate fell slightly to 5.3% (5.4% expected), due to a decrease in the labour force participation rate which fell to 65.5%, down from 65.7%. In total number terms, the size of the labour force fell by 9,600.

The Australian dollar has gained ground following the release, rising by 0.4% to around 72.65 US cents.

Despite the headline fall, there was another rise in full-time employment which climbed by 19,300, offset by a fall of 23,200 in part-time employment.

ABS, Business Insider

“Over the year to July, the unemployment rate declined by 0.2%. This continues the gradual decrease in the trend unemployment rate from late 2014 and is the lowest it has been since 2012,” said ABS chief economist Bruce Hockman.

June’s increase in employment, initially reported at 50,900, was also revised higher to 58,200.

In addition, total hours worked rose by four million hours (0.2%) in July to 1,749.6 million hours in seasonally adjusted terms.

Paul Dales from Capital Economics said July’s fall in employment “isn’t worth losing sleep over”.

“Nothing has really changed – jobs growth remains healthy enough and the unemployment rate has continued to edge lower,” Dales said.

“The 3,900 decline in employment in July isn’t a sign that the economy has suddenly hit the buffers, as the normal volatility of the labour market data means there is occasionally a fall even though the underlying trend is healthy,” Dales said.

“Even so, the labour market won’t be strong enough to trigger a decent rise in wage growth for a while yet.”

By state and territory, Victoria recorded by far the largest increase with an additional 29,400 jobs in July, followed by SA with a gain of 1,700.

Gains in Victoria were driven by a big lift in part-time employment, which rose by 30,100, offsetting a fall of 700 in full-time employment.

The largest decrease was in New South Wales, which recorded a fall of 27,100 in seasonally adjusted terms. All of the weakness was driven by part-time employment, which fell by 39,700, against a lift of 12,600 in full-time employment.

July’s decrease may be partly attributable to sample group rotation, as the outgoing group in June had a higher employment-to-population ratio, along with a lower unemployment rate, than the incoming group in July.

Callam Pickering, APAC economist for jobs website Indeed, said the July data was a mixed result but the underlying trend remains positive.

“Full-time employment growth was weak towards the start of the year but has since accounted for almost two-thirds of employment growth over the past three months,” Pickering said.

“From a Reserve Bank perspective, the positives would outweigh the negatives. But much progress still needs to be made, and it might be years before labour market slack diminishes enough to push wage growth back to normal levels.”

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