Unemployment drops to lowest levels since 2016

If you’re interested in property research, one of the statistics you must keep an eye on is unemployment levels.

You see… jobs growth attracts people and leads to population growth and wages grow.

And when people feel secure in their jobs, when they feel financial secure, they’re more likely to make large purchases like buying a home.

So the falling unemployment rate is good news for property.

In fact despite job growth stalling, unemployment has dropped to 8.7% in June as fewer people look for work and the casualisation of the Australian workforce continues.

By the way… this “real” unemployment figures of 8.7% for as quoted by Roy Morgan remains substantially higher than the current ABS estimate for May 2018 June of 5.4%.

The latest data for the Roy Morgan employment series for June shows:

• The workforce which comprises employed and unemployed Australians has fallen to 13,416,000, down 114,000 on a year ago;
• The Australian workforce has contracted over the past 12 months as both fewer Australians are in jobs and fewer Australians are now looking for work than a year ago;
• 12,245,000 Australians were employed in June, down 85,000 over the past year;
• The fall was driven by a drop in full-time employment which was down 300,000 to 7,800,000, even while part-time employment increased 215,000 to 4,445,000;
• 1,171,000 Australians were unemployed (8.7% of the workforce); a decrease of 29,000 (down 0.2%) on a year ago and the lowest level of unemployment for nearly two years since September 2016;
• In addition 1,302,000 Australians (9.7% of the workforce) are now under-employed, working part-time and looking for more work, a fall of 143,000 in a year (down 1%).

Source: Roy Morgan Single Source October 2005 – June 2018. Average monthly interviews 4,000. *Workforce includes those employed and those looking for work – the unemployed.

Expert commentary:

Michele Levine, Chief Executive Officer, Roy Morgan, says unemployment has dipped to its lowest level in nearly two years in June at 8.7% but focusing purely on the unemployment rate ignores the broader contraction in the Australian workforce over the past year:

“Today’s Roy Morgan employment estimates show unemployment dropping to 8.7% in June now 0.2% lower than a year ago with 1.17 million Australians unemployed.

However the drop in the unemployment rate isn’t because of a surge in employment.

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“Overall Australian employment is down 85,000 compared to this time a year ago with 215,000 new part-time jobs created over the last year not enough to offset the loss of 300,000 full-time jobs but indicative of the increasing casualisation of the Australian workforce in the age of the ‘gig economy’.

“This increase in part-time employment means under-employment remains at a high level of 9.7% with 1.3 million Australians now under-employed. Although a total of 2.47 million Australians (18.4% of the workforce) now unemployed or under-employed is the lowest combined figure in 2018 it remains over three times higher than the official ABS unemployment level of 715,000 (5.4%) for May.

“These figures show that the long-term employment trends of increasing casualisation of the Australian workforce remain in effect and illustrate the need for accurate statistics into the true employment situation in Australia.

“Only by having a detailed understanding of real levels of unemployment and under-employment in Australia can the Government and important institutions such as the RBA set the right policies to handle Australia’s labour market.

“The question of how a country at near full-employment as the ABS figures suggest can have record low wage growth is often posed but the answer is clear to anyone who has kept up to date with the latest Roy Morgan monthly employment statistics.

“Over 2.4 million Australians looking for work or looking for more work in June explains why wage growth in Australia remains at record lows.

Improving wage growth and the performance of the Australian economy is as simple as designing policies that engage these under-utilised workers and encourage employers to offer more jobs, and more hours, to Australians that want more work.”

*The ‘under-employed’ are those people who are in part-time work or consultants who are looking for more work.

(Unfortunately the ABS does not release this figure in their monthly unemployment survey results).

About Michael Yardney Michael is the founder of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.