Australian labour force data – improvement but no positive trend yet emerging

The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for May 2017 shows that employment rose by 42,000 on the back of a strong rebound in full-time employment (up 52,100), given last month’s contraction in full-time work. Unemployment fell by 18,600, which allowed the official unemployment rate to fall to 5.5 per cent. There was a slight uptick in the participation rate as job opportunities improved. Underemployment remained steady at 8.6 per cent and broad labour underutilisation remains high at 14 per cent with unemployment and underemployment summing to 1,837.4 thousand persons. The teenage labour market also deteriorated in May contrary to the overall improvement. It remains in a poor state.

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US labour market – poor results – not close to full employment

On June 6, 2017, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – May 2017 – which showed that total non-farm employment from the payroll survey rose by just 138,000 in May. While the payroll data confirms an on-going deterioration in job creation, an examination of the Labour Force Survey data presents an even worse picture. The official unemployment rate fell from 4.4 per cent to 4.3 per cent, the lowest rate since May 2001. But the fall in unemployment of some 195 thousand persons was not a sign of strength. Total employment fell by 233 thousand but was a smaller decline than experienced by the labour force (down 429 thousand) on the back of a fall in the participation rate (0.2 percentage points). In other words, hidden unemployment rose while official unemployment fell as workers gave up looking for work in the face of declining employment growth. The estimate of employment change from the Labour Force Survey was also positive (156 thousand net jobs added). There is still a large jobs deficit remaining and other indicators suggest the labour market is still below where it was prior to the crisis. Which makes the claims by a number of analysts that the US jobs market is so strong that inflation is about to accelerate on the back of wages growth (which at present is largely non-existent). In other words, there are many assessments that the unemployment rate has reached the so-called NAIRU (Non-Accelerating Inflation Rate of Unemployment) below which accelerating inflation becomes inevitable. I doubt that assessment.

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Australian labour market data – mixed signals with underemployment rising

The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for April 2017 shows that while employment rose by 37.4 thousand, full-time employment fell by 11,600 and monthly hours worked fell by 0.12 per cent. Underemployment rose by 0.1 points. The employment growth did outstrip the underlying growth in the population and with the participation rate steady, unemployment fell by 19,100. The unemployment rate fell by 0.2 points. Certainly the employment growth was modest compared to last month. Broad labour underutilisation remains high at 14.3 per cent with unemployment and underemployment summing to 1,836.7 thousand persons. The teenage labour market also showed some improvement although full-time employment fell. It remains in a poor state.

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Australian labour market – stronger performance this month (but suspicions remain)

The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for March 2017 shows a rather substantial jump in full-time employment (74,500 thousand) and a rising participation rate (up 0.2 points). That is usually a virtuous duet even though unemployment rose by 4 thousand and the unemployment rate was steady at 5.9 per cent. I say virtuous because it means that more jobs are being created and more people are coming back into the labour market to access the better environment. The curious thing though is tha total monthly hours of work barely rose, which leads one to suspect that the employment strength is a sampling issue and we will see next month whether the underlying behaviour over the last several months reasserts itself or whether March 2017 marks a shift to better times. Put me in the sceptical camp at this stage. Broad labour underutilisation remains high at 14.7 per cent with unemployment and underemployment summming to 1,890.3 thousand persons. The teenage labour market also showed some improvement but remains in a poor state. Overall, we will have to see.

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US labour market – hard to read at present but probably improving

On April 7, 2017, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – March 2017 – which showed that total non-farm employment from the payroll survey rose by only 98,000, a considerable shortfall when compared to the previous two months. The unemployment rate fell to 4.5 per cent (down 0.2 points). The question is whether this month’s results signal a slowdown after the positive ‘Trump’ spike or is just a monthly variation that will iron itself out over the longer period. Whatever the direction, there is still a large jobs deficit remaining and the jobs created since the recovery are still biased towards low pay sectors.

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Even more evidence that the US labour market is below full employment

Regular readers will know that I have been investigating how close the US is to full employment, given that various commentators and conservative types have been trying to claim it is and that, as a result, the US government should hack into the fiscal deficit and the central bank should raise interest rates. Today, I consider some more evidence of a comparative nature to advance my understanding of the situation. The Bloomberg article (March 29, 2017) – The Jobs Statistics Trump Should Be Worried About – made some good points about the state of the US labour market. It focused on the significant decline in the US labour participation rate since 2000 and the cyclical component of that decline, which is a common trend in many advanced nations and one I have written a lot about in the past. The additional evidence presented in the Bloomberg articles demonstrates that the US economy is still nowhere near full employment. This blog adds some evidence from Australia and Japan by way of comparison.

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More evidence that the US labour market is not at full employment

Regular readers will recall a few of my blogs where I have demonstrated that the US economy is still nowhere near to what one might call full employment, even though that concept is highly contested and can span a range of outcomes depending on the ideological disposition one takes. I have also done some research decomposing the marked decline in the US participation rate since around 2000 into age-related effects and what I call the discouraged worker effects (workers giving up looking for jobs because of the slow employment growth). This week (March 20, 2017), research published by the Federal Reserve Bank of San Francisco bears on this topic –
How Tight Is the U.S. Labor Market?
– and they essentially concur with my previous assessments. There work is interesting because it reaches the same conclusion from a variety of methods, which is always a good sign because it means the result is not method-specific. However, there are those who for their own ideological reasons want to argue that the US economy is already at full employment. If they were correct, it would mean the quality of that ‘full employment’ had shifted markedly – lower – as a consequence of the GFC and its aftermath and that the associated underutilisation levels had risen.

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Australian labour force – negative employment growth and rising unemployment

This analysis is coming from Brussels and the data doesn’t look any better here than it does back in Australia. The situation being revealed is very poor. The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for February 2017 shows total employment fell by 6,400 and repeats the behaviour of the last few years where it has been zig-zagging around the zero growth line on a more or less monthly basis. Australia’s status as a part-time employment nation continues, despite a modest rise in full-time employment this month. Over the last 12 months, Australia has lost 23.2 thousand full-time jobs (in net terms) and gained 127.8 thousand part-time jobs. Overall, employment has grown by only 104.6 thousand jobs (net) – a very low annual figure. This status as the nation of part-time employment growth carries many attendant negative consequences – poor income growth, precarious work, lack of skill development etc. The failure of employment to keep pace with the labour force growth saw unemployment rise sharply in February 2017 by 26 thousand and the unemployment rate to rise by 0.2 points to 5.9 per cent. Underemployment also rose sharply by 0.3 points to 8.7 per cent and taken together (unemployment and underemployment) there were 14.6 per cent of the labour force counted as broadly underutilised (1,862.7 thousand). The teenage labour market remains in a poor state and deteriorated further in February. It requires urgent policy intervention. Overall, the Australian labour market is weak and showing no signs of improvement. The poor outlook signals the need for a policy shift biased to expansion. It is clear that the current restrictive fiscal policy position adopted by the Federal government is not sufficient to redress the inadequate non-government spending growth.

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Australia’s wage outcomes – a race to the bottom and nowhere

Yesterday (February 22, 2017), the Australian Bureau of Statistics released its latest – Wage Price Index, Australia – for the December-quarter 2016. For the fourth consecutive quarter, annual growth in wages has recorded its lowest level since the data series began in the December-quarter 1997. Real wages are barely growing and trailing productivity growth by a long way. The flat wages trend is intensifying the pre-crisis dynamics, which saw private sector credit rather than real wages drive growth in consumption spending. The Australian government, which should be showing leadership, is obsessing about who it can rope into a free trade deal now the US have scuttled the TPP. The lessons have clearly not been learned.

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Australian labour market – remains in a sluggish state

The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for January 2017 shows total employment barely increased for the second month in a row and Australia’s status as a part-time employment nation firms. Over the last 12 months, Australia has lost 56.1 thousand full-time jobs (in net terms) and added only 103.4 thousand overall. This status as the nation of part-time employment growth carries many attendant negative consequences – poor income growth, precarious work, lack of skill development etc. The teenage labour market remains in a poor state but improved slightly in January. It requires urgent policy intervention. The unemployment rate fell by 0.1 points but only because the labour force contracted as participation declined. In other words, hidden unemployment rose while official unemployment fell. Not a win-win. Overall, the Australian labour market is weak and showing no signs of improvement. With weak private investment now on-going and real GDP contracting (in the September-quarter), the poor outlook signals the need for a policy shift biased to expansion. It is clear that the current restrictive fiscal policy position adopted by the Federal government is not sufficient to redress the inadequate non-government spending growth.

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