The labour force survey is out and it’s a cracker with 24,100 jobs added in the month and the unemployment rate sticking at 6.2%
Just three months ago a rate of 6.2% – or 6.245% as the Kouk just tweeted – with the RBA saying unemployment would rise too, was widely seen as overly pessimistic by most commentators. But given recent volatility and the print of 6.4% amid the turbulence of the past few months’ data, this is a good result.
Strong employment growth is one of the key ways the Australian economy can bridge the gap between the mining investment boom and the new economy that needs to emerge. So far the economic transition has been slow and if recent data is to be believed, it’s slowing.
Consequently Australia’s economic transition is currently proving more difficult than it seems the RBA hoped and many imagined. However, all is not lost – employment is what the economy needs and needs badly.
Here are three things that we learnt from today’s data which give reason, good reason, to hope that the economy is headed in the right direction.
1. More Australians are working than ever before
An unemployment rate of 6.2% is toward the top of the range for the past decade and the reality is that it may go higher in the months ahead unless the RBA bites the bullet, ignores Sydney housing and cuts rates.
But what unemployment does is focus on those looking for work. I prefer to focus on those working because – even at entry level – a job is a job and the income that goes with that is spent and has multiplier impacts on the economy.
So the extra 121,000 jobs created in 2014 and the total of 11,589,000 Australians in work remains good news.
2. Aggregate hours worked is rising once again
I was concerned recently with what looked like a breakdown in hours worked throughout the economy. Certainly with more people working than ever before we would hope to see more hours worked then ever before, but at least this data suggests that things are moving in the right direction.
Why is that important? Because it suggests the ‘stickability’ of the recent employment gains because workers are being utilised.
3. Unemployment will still worry people and is a headwind
Jobs give people salaries and create spending but the headline impact of rising unemployment can undo that. So it would be disingenuous not to highlight that Australian unemployment is likely to trend higher.
But that doesn’t mean that jobs wont still be created as the ANZ job ads suggests.
This data is good news for the economy but the rising unemployment rate and low wage growth is going to be a continuing headwind to Australia’s economic transition.