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Jobs figures don't tell the real story

AAP logoAAP 18/08/2016 Garry Shilson-Josling, Economist

The latest jobs figures provide some good-looking headline numbers but it takes some digging to understand that what's really happening with Australia's unemployment situation is a lot less impressive.

In a nutshell, if not for fewer people active in the jobs market and a shrinking working week, the jobless rate would be rising.

The bureau's latest estimates show there is a barely perceptible downward trend in the unemployment rate, but at the current rate of decline the jobless rate would not reach five per cent until Australia's Olympic athletes - soon to depart Rio - are settling into the Olympic Village in Tokyo in 2020.

Australian Bureau of Statistics seasonally adjusted figures released on Thursday show unemployment dropped to 5.7 per cent in July, down from 5.8 per cent, while the number of people in work rose by 26,200.

But the best that can really be said about employment growth is that it's holding the line on unemployment.

The jobs figures continue a recent pattern of good-looking headline numbers bundled with some significant ifs and buts.

There's no doubt the headline numbers did look good in July but the increase in employment was all in part-time jobs - up 71,600, compared with a fall of just over 45,400 full-time workers.

These were unusually large changes that suggest either a random variation in the survey sample, or perhaps a temporary shift in the regular seasonal pattern.

Either way, they do not tell the story of what's really happening in the labour market.

Amid such uncertainty, the trend is your friend.

According to the ABS the rising trend in employment works out to about 1.2 per cent a year - a little bit less than the rate of expansion in the working-age population.

That spells higher unemployment unless a smaller proportion of the working-age population is active in the jobs market.

And that's exactly what's happening.

A lower rate of participation in the jobs market took about 33,000 adults out of the unemployment calculation over the past year.

In recent months that has just been enough to offset the sluggishness of jobs growth and stop the jobless rate from rising.

In fact the unemployment rate, despite its marginal fall in July, was barely changed from its level at the end of last year.

That is not a picture suggesting further significant falls in the jobless rate in the near term.

And even then, any fall would likely be because the work is being shared around a smaller proportion of the working-age population working fewer hours.

Over the year to July, the average working month fell by just over an hour to 138 hours and 46 minutes.

That drop in hours worked is not all about people preferring more time to go to the beach or laze around: the bureau surveys attitudes to the hours available for work and in May, 8.9 per cent of employed workers wanted more hours.

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