AUSTRALIAN EMPLOYMENT JUMPS BY 38,500

Photo: Mark Dadswell/ Getty.

Australia’s employment report for July has smashed expectations, but it may be just a little too good to be true.

In July employment increased by 38,500, beating expectations for growth of 10,000. In June employment increased by 7,000, down slightly on the 7,300 figure reported previously.

Employment now stands at 11.811 million, the highest level on record.

Part time employment increased by 26,100, outpacing a lift in full time of 12,500.

Employment has now risen for three months in a row, the first time that has occurred since March 2014.

In 2015 alone employment has increased by an impressive 162,867 jobs, equating to an average monthly gain of 23,267.

Over the past year employment has jumped by 243,592, the largest increase since March 2011. At 2.106%, the annual pace of growth is the quickest since April 2011.

Despite the sharp increase in employment, the unemployment rate rose to 6.3%. Markets had been expecting a rate of 6.1%, unchanged from the upwardly-revised 6.1% figure of June.

Without rounding, the unemployment rate was 6.349%, the highest level seen since June 2002. Had it been just 0.001% higher, the figure would have been reported as 6.4%.

A jump in labour market participation, up to 65.1% from 64.8%, explains the sharp lift in the unemployment rate.

The level, the highest since in April 2013, was driven by a 78,576 increase in labour market participation. In numeric terms it was the largest expansion in the size of the labour force since April 2001.

Unemployment, as a result of the huge increase in the size of the labour market, rose by 40,100 to 800,700.

While the numbers in employment rocketed higher, strangely, aggregate hours worked fell by 0.2% to to 1.6332 billion hours.

The employment-to-population ratio, a measure of the number of employed Australians to Australia’s population size, increased to 61.0%, th highest level seen since November 2013.

So what to make of the report? Employment growth is running hotter than at any point in the past four years while unemployment sits at a 13-year high.

According to Westpac’s senior economist Justin Smirk – someone who is always on top of these things – the anomaly is likely to be driven by gremlins in the survey, rather than what’s actually happening on the ground.

There was a particularly large increase in employment in New South Wales, over 75% of the national increase, with almost all of it concentrated among women. On top of the huge jump recorded in labour market participation, it has raise more than a few eyebrows.

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