Employment rose by 14,000 in July after a revised fall of 28,300 in June (previously 27,000). Economists had expected 10,000 jobs to be added.

• In July part-time jobs rose by 4,800 after rising by 6,400 in June. Full-time jobs rose by 9,200 after sliding by 34,800 in June.
• The unemployment rate eased from an upwardly revised 5.3 per cent to 5.2 per cent in July. The participation rate eased from 65.3 per cent to 65.2 per cent.
• The number of hours worked rose by 0.8 per cent in July to be 0.2 per cent lower in annual terms.
• Unemployment across states and territories: NSW 5.2 per cent (5.1 per cent in June); Victoria 5.4 per cent (5.5 per cent); Queensland 5.8 per cent (5.3 per cent); South Australia 5.4per cent (6.4 per cent); Western Australia 3.6 per cent (3.5 per cent); Tasmania 6.5 per cent (7.4 per cent); Northern Territory 4.1 per cent (4.1 per cent); ACT 3.7 per cent (3.6 per cent).

What does it all mean?

• The latest employment figures are certainly encouraging – a pickup in jobs across the economy. However given the job losses in the prior month it suggests that the labour market is effectively treading water. In recent times there has been an array of high profile job losses in key industries like manufacturing, transport and housing. But it does seem like a fare proportion of Aussie businesses are holding onto existing staff or hiring new staff, positioning themselves for the pickup in growth and investment over the coming year.
• Over the past year the missing ingredient in the domestic economy has been confidence, however the last month may just prove a real catalyst for a turnaround in confidence. Rate cuts, stronger retail sales data, a pickup in housing activity, rising share markets and the latest employment figures should provide a great deal of encouragement to policymakers, households and businesses. More people in jobs will mean more spending across the economy and more tax receipts for the government.
• What is clear is that the labour market is healthy without shooting the lights out. Yes, it was encouraging that employment grew but more forward looking indicators like job advertisements have suggested that further labour market gains may be more circumspect. In fact internet and newspaper job advertisements have fallen for four consecutive months, suggesting job gains will be less robust in the next few months.
• Still, Australia’s job market remains healthy, supporting growth in the broader economy. And it is still the case that an extra 98,600 odd workers now have jobs compared with the start of this year. And that means more latent spending power. Of course in the current environment people are still more likely to be saving rather than spending – however as confidence improves activity levels will pick up.
• The deep rate cuts in recent times will help to support activity in coming months and provide businesses with a bit more breathing space – especially given that trading conditions are difficult. In addition the Federal Government handouts will provide a short-term lifeline for businesses. As a result it is more likely that businesses will hold onto current staff rather than culling their existing workforce.
• The jobs data will provide another degree of comfort for the Reserve Bank. An array of indicators has suggested that activity levels have bottomed out and showing modest signs of improving. And while policymakers will want to get a better gauge of the impact from the recent stimulatory further rate cuts still remain on the cards. The Central Bank will be more focused on the current situation in Euro Zone and the slowdown in China. CommSec expects another quarter of a per cent rate cut before the end of the year.

What do the figures show?

• Employment rose by 14,000 in July after a revised fall of 28,300 in June (previously 27,000) Economists had expected 10,000 jobs to be added. In July part-time jobs rose by 4,800 after rising by 6,400 in June. Full-time jobs rose by 9,200 after sliding by 34,800 in June.
• The annual employment growth rate rose 0.4 per cent to 0.6 per cent in July. The working age population rose by 22,300 in July after lifting by 19,500 in June. The working age population grew by 1.26 per cent over the past year.
• The unemployment rate eased from an upwardly revised 5.3 per cent to 5.2 per cent in July. The participation rate eased from 65.3 per cent to 65.2 per cent.
• The number of hours worked rose by 0.8 per cent in July to be 0.2 per cent lower in annual terms.
  Unemployment across states and territories: NSW 5.2 per cent (5.1 per cent in June); Victoria 5.4 per cent (5.5 per cent); Queensland 5.8 per cent (5.3 per cent); South Australia 5.4per cent (6.4 per cent); Western Australia 3.6 per cent (3.5 per cent); Tasmania 6.5 per cent (7.4 per cent); Northern Territory 4.1 per cent (4.1 per cent); ACT 3.7 per cent (3.6 per cent).
• Queensland recorded the bulk of the job gains in July (+6,200), followed by NSW (+3,300), South Australia (+2,100), Tasmania (+900). Jobs fell the most in Western Australia (-4,200) followed by Victoria (-3,800). In trend terms employment rose in the ACT (+400) and was flat in the Northern Territory.

What is the importance of the economic data?

• The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.
• If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.

What are the implications for interest rates and investors?

• The rate cuts in recent times will help to support activity in coming months and provide businesses with a bit more breathing space – especially given that trading conditions are difficult. However the downside risks to global growth – particularly the slowdown in China and ongoing Euro zone debt concerns – will ensure businesses still show a level of cautiousness.
• CommSec is pencilling in a further quarter per cent rate cut before year end.