CHART: The future of the Australian economy is now about one city - and it's Sydney

SYDNEY, AUSTRALIA – JUNE 17: A rainbow is seen over the Sydney Harbour Bridge on June 17, 2015 in Sydney, Australia. (Photo by Cameron Spencer/Getty Images)

Australian employment continued both its recent volatility and strength in July, the ABS reported this morning.

But according to Ivan Colhoun, the NAB’s chief economist markets, that growth is increasingly coming from just one source.

Looking at state employment trends broadly accords with our understanding of the economy – most of the jobs in the month – and indeed in trend terms – are being created in NSW (+30,000 m/m, with trend employment growth of +15,000 a month). Queensland employment growth has been somewhat stronger in trend terms in recent months (+4,000 monthly). Elsewhere, employment is broadly flat, including a little surprisingly, in WA. With the exception of a surprisingly flat employment trend in Victoria, the trend data – including a relatively flat unemployment outcome, seems more believable.

Colhoun added “we’d discount the sharp rise in unemployment as the start of a new trend and instead conclude that the unemployment rate has been broadly stable at around the 6.1-6.2% mark (note substantial volatility in the chart below). This is still a better outcome than appeared likely a few months ago.”

Indeed it is.

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