Commentary and analysis of labour force data releases.

Australian labour market – weakness continues, January was a blip

The Australian Bureau of Statistics released the latest data today – Labour Force, Australia, January 2019 – which reveals a weak labour market and continues the trend established in 2018 and is consistent with the very weak National Accounts data that was released earlier this month. It now looks like the stronger January result was a blip. The weak employment growth was accompanied by a decline in the labour force, and, as a result, unemployment fell by 11,700 thousand. Adjusting for the weaker participation suggests that the unemployment rate would be 5.2 per cent rather than 4.9 per cent. Last month, I concluded that the range of indicators available to us suggest that there would be a further slowdown in February and March. That is what was revealed by today’s data. My overall assessment is the current situation can best be characterised as weak. The Australian labour market remains a considerable distance from full employment. There is clear room for some serious policy expansion at present. There is clear room for some serious policy expansion at present. Where is the Labor Party on this? Chasing fiscal surpluses! Go figure.

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US labour market weaker than it was at the end of 2018

Last week’s (March 8, 2019) release by the US Bureau of Labor Statistics (BLS) of their latest labour market data – Employment Situation Summary – February 2019 – is a little hard to believe and shows the sampling variability involved in survey work. In January, the BLS estimates that total non-farm payroll employment rose by 311,000 (revised up from 304,000). This month the estimate was only 20,000. So either the US economy is crashing (given employment is a lagging indicator) or some one-off factors (bad weather, shutdown, you name it) were present or the results are too variable to be believed. The most likely explanation is that employment growth is fading and the strength in the US labour market coming into 2019 is gone. Taking the Household Survey results, we saw employment rise by 255 thousand and the official unemployment rate fell by 0.2 points to 3.8 per cent on the back of a steady participation rate. Even with all this volatility in the estimates, the best guess is that the US labour market has probably weakened somewhat from where it was at the end of 2018. It is also clear that there is still a substantial jobs deficit remaining and considerable scope for increased participation.

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Australian labour market – slight improvement but still no clear direction

Today, the Australian Bureau of Statistics released the latest data – Labour Force, Australia, January 2019 – which reveals relatively strong full-time employment growth which reverses the last two months of contracting full-time employment contraction. The strong employment growth was unable to keep up with the growth in the labour force, and, as a result, unemployment rose a little (6.6 thousand). The strong full-time result saw the broad measure of labour underutilisation fall by 0.1 points to 13.2 per cent but still remains at elevated levels. The teenage labour market continued to deteriorate. The current situation can best be characterised as slightly improved but with no clear direction in sight. Other indicators are suggesting a slowdown in the next few months. What we can conclude is that the Australian labour market remains a considerable distance from full employment. There is clear room for some serious policy expansion at present.

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US labour market continues to improve but ‘middle class’ jobs disappearing

Last week’s (February 1, 2019) release by the US Bureau of Labor Statistics (BLS) of their latest labour market data – Employment Situation Summary – January 2019 – showed that total non-farm payroll employment rose by 304,000 and the unemployment rate rose by 0.1 points to 4 per cent on the back of a 0.1 points rise in the participation rate. The labour force survey estimates were significantly impacted by changes in population benchmarks (an annual occurrence). However, all indications are that the labour market continues to improve. We will see in the next few months whether the strong January payroll employment growth was a one-off blip or a sustained trend. While the US labour market is looking fairly robust there is still a substantial jobs deficit remaining which tells us that it remains some distance from full employment. And, my latest analysis on which occupations are enjoying the employment growth shows that there has been a distinct hollowing out of median pay jobs (the so-called ‘middle class’ jobs), which helps to explain the sharp increases in income inequality.

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Australian government satisfied with failure

Only a short blog post today as it is Wednesday and I reserve most of the day for other writing (book manuscripts etc). What follows is some analysis I provide to several Australian journalists to help them get the arguments right when it comes to the political spin that the politicians try to pump out. Australia’s Prime Minister has been making a big deal that “Over the last five years we’ve delivered more than a million jobs” and yesterday, as we lead into the election cycle (due in May) he said that the Federal government aimed “to see 1.25 million jobs created over the next five years”. Should we cheer or cry? Many economists who have offered commentary over the last 24 hours seem to think we should be happy with that goal. Me, I think it is about half as many new (net) jobs that are required given the state of the labour market and signals a failed policy strategy. Here is why I think that.

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British labour market – rise in self-employment driving growth

The British Office of National Statistics (ONS) published its latest labour market data last week (January 22, 2019) – UK labour market: January 2019. Employment continues to increase, unemployment is steady and inactivity is falling (participation is rising). Real wages are also finally starting to rise (average weekly earnings rose by 3.3 per cent over the last 12 months) after a decade of flat wages growth. The ONS say that the 4 per cent unemployment rate “has not been lower since December 1974 to February 1975”. But the labour market of 2019 is very different to that of late 1974. While the growth in real wages is a positive development, the large negative is that employment for employees fall in the three months to November 2018 and all the employment growth was taken by self-employed. The other disturbing statistic is that if we considered the involuntary part-time workers to be equivalent to the unemployed, then the adjusted unemployment rate would be around 6.6 per cent, a far cry from full employment.

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Australian labour market – plodding along with no direction in sight

Today, the Australian Bureau of Statistics released the latest data – Labour Force, Australia, December 2018 – which reveals modest employment growth but a second consecutive month of full-time employment contraction. The moderate employment growth, however, was slightly higher than the weak growth in the labour force and unemployment fell marginally. The broad measure of labour underutilisation fell by 0.2 points to 13.3 per cent. The teenage labour market continued to deteriorate despite the positive employment growth. The current situation can best be characterised as plodding along with with no direction in sight. Other indicators are suggesting a slowdown in the next few months. What we can conclude is that the Australian labour market remains a considerable distance from full employment. There is clear room for some serious policy expansion at present.

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US labour market remains fairly robust

Last week’s (January 4, 2019) release by the US Bureau of Labor Statistics (BLS) of their latest labour market data – Employment Situation Summary – December 2018 – showed that total non-farm payroll employment rose by 312,000 and the unemployment rate rose by 0.2 points to 3.9 per cent on the back of a 0.2 points rise in the participation rate. The coincidence of rising employment and rising participation is usually a good sign as workers are being attracted back into the labour force by the increased job opportunities. We will see in the next few months whether that is a one-off blip or a sustained trend. If it is a sustained trend then the rise in unemployment as a consequence of the labour force growth outstripping employment growth will be temporary and sustained reductions in unemployment will then occur. While the US labour market is looking fairly robust there is still a substantial jobs deficit remaining which tells us that it remains some distance from full employment. There is room for expansion.

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Australian labour market – weak with broad underutilisation rising

Today, the Australian Bureau of Statistics released the latest data – Labour Force, Australia, November 2018 – which shows that the employment growth was all due to part-time jobs growth (probably related to the Xmas season) and both full-time employment and hours worked were negative. Not a good sign. The moderate employment growth, however, trailed behind the growth in the labour force and unemployment rose a bit. The broad measure of labour underutilisation rose by 0.3 points to 13.6 per cent with underemployment rising by 0.2 points. Again, a sign of a weak labour market that is relying on part-time jobs for growth. The Australian labour market remains a considerable distance from full employment. There is clear room for some serious policy expansion at present.

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US labour market moderated in November and considerable slack remains

Last week’s (December 7, 2018) release by the US Bureau of Labor Statistics (BLS) of their latest labour market data – Employment Situation Summary – November 2018 – showed that total non-farm payroll employment rose by 155,000 and the unemployment rate was essentially unchanged at 3.7 per cent. Participation was steady. While the US labour market is reaching unemployment rates not seen since the late 1960s, the participation rate is still well below the pre-GFC levels and a substantial jobs deficit remains. Other indicators suggest there is still considerable slack in the labour market, especially outside the labour force (marginal workers) and among the underemployed. Taken together, the US labour market moderated in November but remains some distance from full employment.

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