Unemployment rate shifts from 6% to 5.8% in February 2016

Last week the Australian Bureau of Statistics (ABS) released their labour force statistics for February 2016.

The monthly data release is valuable because it highlights factors such as the unemployment rate and changes in both full-time and part-time employment.

From a housing perspective, more employed people, particularly full-time employed, means more capability to pay off a mortgage.

Chart-1-2

In February 2016, the national unemployment rate was recorded at 5.8% in both trend and seasonally adjusted terms.

There have been some concerns lately about the accuracy of the seasonally adjusted figures however, both measures have now converged for the first time since September 2015.

As you can see the trend in the unemployment rate is lower after it recently hit as high as 6.3%.

Chart-2-1

Over the past 12 months the number of employed persons has increased by 239,388 in seasonally adjusted terms or by 2.1%.

This 2.1% increase has been made up of a 133,411 or 1.7% increase in full-time employment and a 105,976 or 3.0% increase in part-time employment.

Over recent years part-time employment growth has consistently outpaced growth in full-time employment.

At the state and territory level it is better to look at the trend data as it is much more stable than the seasonally adjusted figures.

The following charts show the trend unemployment rates across each of the states and territories.

Chart-3-2

Chart-4-2

Based on trend data, South Australia has the nation’s highest unemployment rate currently at 7.2% followed by Tasmania (6.9%), Western Australia (6.1%) and Victoria (6.1%).

The nation’s lowest unemployment rate is found in the Northern Territory (4.3%) followed by the Australian Capital Territory (4.9%), New South Wales (5.3%) and Queensland (5.9%).

The above charts show that unemployment is trending lower in New South Wales, Queensland and South Australia and is fairly flat to slightly increasing across the other states and territories.

Chart-5

Chart-6

Employment is increasing across the nation however, across the states and territories the job creation picture varies greatly.job employment work career look find search

Employment has increased over the past year in New South Wales (4.2%, 154,144), Victoria (1.6%, 47,202), Queensland (2.8%, 65,258), South Australia (1.0%, 7,964) and the Australian Capital Territory (1.3%, 2,672).

Meanwhile, jobs have been shed over the past year in Western Australia (-0.2%, -3,037), Tasmania (-1.2%, -2,808) and the Northern Territory (-1.2%, -1,638).

While job losses are not a cause of an economic downturn rather an effect, it is interesting to note that jobs have consistently been created in New South Wales and Victoria during all periods outside of severe economic downturns.

That suggests that if job creation slows or falls in these two states it would potentially indicate an economic downturn.

Most other states and territories have recorded job losses at times outside of a significant national economic downturn.

Chart-7

From a housing market perspective, job creation is vital.

It encourages more people to move to a region and it improves the capability of someone to be able to repay a mortgage. employment

Since the end of 2008 growth in home values has largely occurred in Sydney and Melbourne.

If we look at the state employment data over the same period you can see that particularly for full-time employment job creation in percentage terms has generally been much greater over that period of time in New South Wales and Victoria with the Northern Territory the only region stronger.

Of course, New South Wales and Victoria are also the two most populous states and in terms of the number of full-time jobs created they have created the most full-time jobs since 2008.

Western Australia has recorded the third highest total increase in full-time jobs since 2008 however, New South Wales has created more than three times as many full-time jobs and Victoria has created almost two and a half times as many.

The comparatively strong growth in full-time jobs in New South Wales and Victoria is a driver of the higher increases in population and the stronger home value growth in Sydney and Melbourne.

Chart-8

Looking at the past 12 months, full-time jobs growth has only been positive in New South Wales (4.7%), Victoria (2.1%), Queensland (1.7%) and the Australijob employmentan Capital Territory (1.1%).

In Queensland and the ACT in particular this is important because Queensland has only recorded a 4.1% increase in full-time jobs since 2008 while the ACT has recorded a 3.1% increase over that time.

The creation of more full-time jobs in these two regions is probably a key driver of the strengthening home value growth and demand for homes in Brisbane and Canberra.

Elsewhere, the declining number of full-time jobs suggests that unless interstate and overseas investment in housing gathers pace that housing demand is likely to continue to be quite weak.

New South Wales and Victoria continue to be the powerhouses of job creation and particularly full-time job creation, which is good for the economy because they are our two largest states.

The pick-up in full-time job creation in Queensland and the ACT is encouraging for those regions while elsewhere it would be preferable to be seeing more full-time jobs created however, it may also be a reflection of many people looking for more flexible employment opportunities giving rise to the much stronger creation of part-time jobs.



Want more of this type of information?


Cameron Kusher

About

Cameron Kusher is Corelogic RP Data’s senior research analyst. Cameron has a thorough understanding of the fundamentals such as demographics, trends & economics. Visit www.corelogic.com.au


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