The unemployment rate fell in November, but employment growth is barely enough to prevent it heading higher in the coming months.
The jobless rate fell to 5.2 per cent in November from 5.4 per cent in October, according to data from the Australian Bureau of Statistics in Thursday.
Estimated growth in employment – the number of people with jobs – was 13,900, the third consecutive rise of about that size in a row, after gains of 16,700 in September and 10,200 in October.
But the fall in the unemployment rate over the past two months – in more precise terms from 5.45 per cent to 5.36 per cent then to 5.23 per cent – was not the result of those rises in employment.
The working-age population is rising by 24,500 a month, according to the bureau’s revised estimates, and around 62 per cent of that population is employed.
So the economy needs to finds jobs for 62 per cent – about 15,000 – of those extra people every month to prevent the proportion employed from falling and the proportion unemployed from rising as a result.
The 13,900 rise in November almost managed that.
But the bureau’s estimate of the trend – a smoothed-out version of the seasonally adjusted estimate of employment – is rising at only 5,800 a month.
That’s more than twice as steep as trend growth was estimated to be a month ago, but still barely a third of what it needs to be to stop the unemployment rate from rising.
Unless a greater proportion of the population drops out of the labour market, that is.
And that’s exactly what’s been happening.
The participation rate, as it’s called, was 65.26 per cent in September, 65.17 per cent in October and 65.07 per cent in November.
If not for those falls in labour force participation, the jobless rate would still be at 5.4 per cent.
Looking at a wider view, the participation rate in November last year was 65.47 per cent, and a year before that it was 65.92 per cent.
That fall in participation has taken around 160,000 people out of the labour force – people who would otherwise be counted as unemployed.
And if they had been counted as unemployed, the unemployment rate would be at 6.5 per cent rather than 5.2 per cent.
In other words, falling participation – itself a tell-tale sign of a soft labour market – has been masking inadequate growth in employment, preventing it from showing up in a higher unemployment rate.
Another indicator of the softness in the labour market is in the hours-worked data in the jobs figures.
The number of hours worked in November was up by only 0.3 per cent from a year before.
The November figures from the ABS showed the current trend growth rate in hours worked is a shade under 0.1 per cent a month, which works out to 1.0 per cent annually.
With the working age population growing at 1.6 per cent annually, that doesn’t add up to a steady unemployment rate unless the employed work shorter hours, or more potential workers drop out of the jobs market.
