Strongest job gains in seven years

Labour force

• Jobs growth: Employment rose by 38,500 in July after rising by a revised 7,000 in June (previously estimated at a 7,300 rise in jobs). Full-time jobs rose by 12,400 in July while part-time jobs rose by 26,100.
• A total of 162,900 jobs have been added in the first seven months of 2015 – marking the best start to a calendar year in seven years
• In trend terms, employment has risen for 21 consecutive months.
• Jobless rate lifts: The unemployment rate rose from a revised 6.1 per cent (previously 6.0 per cent) in June to 6.3 per cent in July. The participation rate rose from 64.8 per cent to 65.1 per cent – a 2½-year high.
• Hours worked fell by 0.2 per cent in July. Hours worked are up 1.9 per cent over the year.
• Unemployment across states: NSW 6.0 per cent (June 5.8 per cent); Victoria 6.4 per cent (6.0 per cent); Queensland 6.5 per cent (6.1 per cent); South Australia 7.9 per cent (8.1 per cent); Western Australia 6.4 per cent (5.9 per cent); Tasmania 6.6 per cent (6.5 per cent). In trend terms unemployment in the Northern Territory was 4.2 per cent (4.3 per cent) while ACT unemployment 4.4 per cent (4.3 per cent).

What does it all mean?

• Contrary to the headline lift in the unemployment rate the job market is in decent shape. Yes, unemployment did lift to 6.3 per cent. But the real driver of the lift in unemployment was more people looking for work – not entirely a negative outcome. The participation rate lifted to 2½-year high. A healthier economy, improved job prospects, and more importantly a noted lift in job advertisement over the past year has resulted in more people searching for work – a result that should increase household incomes.
• The labour market at present can be described as solidly on the improve. Hours’ work lifted by almost 2 per cent past year, while there has been a credible lift in overall employment. In fact almost 163,000 jobs have been created in the first seven months of 2015 – marking the best start to a calendar year in seven years.
• At present it appears that businesses have enough work to go on with but are working existing staff a little more intensively before going down the route of taking on more staff. In particular the strength in employment continues to be driven by NSW. Since the lows in January over 113,000 jobs have been created across the NSW economy – a result that resonates with the ranking in the CommSec State of the States report over the past couple of quarters. In contrast in Western Australia employment has lifted by a paltry 8,200 in a similar period.
• The Reserve Bank is unlikely to focus on recent lift in the unemployment rate. Rather the focus will be on the longer term trend. And in trend terms jobs growth has been taking place for 21 consecutive months while the unemployment rate has held stable for the past five months. RBA business liaisons have commented on the noticeable lift in business hiring intentions, strength in employment and rising house worked – suggesting labour market conditions are heading in the right direction. Employers are working existing staff harder but as profitability improves, management will feel more comfortable increasing head count. We could be doing better, but it is OK.