Australian jobs much better than expected, but is it believable?
The May jobs data support the view that the economy is nowhere near as weak as the doomsayers would have it. However, they likely also exaggerate the strength in the jobs market.
Monthly jobs growth resembles a random zigzag that looks more like statistical noise rather than a reliable indicator of actual jobs growth. For example, the changes in employment for the last three months have been: +47,000, -14,000 and now +42,000 which is not credible.
On top of that the acceleration in annual jobs growth to 2% is contrary to the slowing trend in economic growth seen over the last year. As a result, we think it’s premature to conclude that the unemployment rate has peaked.
Australian jobs data for May was much better than expected.
- Employment rose 42,000 and is up a strong 2% year on year
- Part time jobs rose 27,000 and are up 4% year on year and full time jobs rose 15,000 and are up 1.2% year on year
- The unemployment rate fell to 6.0% from 6.2% and is down from a peak of 6.3% in January
While the unemployment rate fell last month, the next chart shows how much stronger the US jobs market now is relative to that in Australia. It’s a similar picture if those who want to work longer hours are included to give what is called the labour underutilisation rate. This fell to 14.5% from 14.9% between February and May but a similar measure in the US has it at 10.8%.
