Unemployment fell, but that’s not necessarily good news

There continues to be mixed news about our economy, doesn't there?

One of the critical statistics I watch carefully is jobs creation or employment figures.

Now that's quite different to unemployment figures, because I like to hear the jobs have been created - on the other hand unemployment figures can be clouded.

For example, Roy Morgan released their unemployment figures for September which went down to 12.9%.

Roy Morgan always have a significantly higher (and probably more accurate) figure than the ABS estimates for unemployment, but here's where it gets confusing.

Roy Morgan states that on the one hand in September 12.9% of the workforce (1.83 million Australians) were unemployed and this represents a decrease of 152,000 on August.

However, there were fewer people employed overall in September than August (down 56,000 to 12,320,000) driven by a decline in full-time workers (down 160,000 to 7,991,000) with an increase of 104,000 in part-time workers to 4,329,000, although not enough to offset the decline in full-time workers.

In addition to those who are unemployed, 1.33 million Australians (9.4% of the workforce) are under-employed – working part-time but looking for more work.

This is up 40,000 on a month ago driven by the increase in part time employment.

But reading between the lines, the good news is that while in total 3.16 million Australians (22.3%) were either unemployed or underemployed in September, as mentioned above, this is an improvement of 112,000 on August according to the latest Roy Morgan employment estimates.

Key findings:

• The workforce is down:
  The workforce in September was 14,148,000 – comprised of 12,320,000 employed and 1,828,000 unemployed Australians looking for work.
  The workforce total is down 208,000 since August driven by falls in both full-time employment and unemployed Australians.
• Fewer Australians employed:
  12,320,000 Australians (12.9% of the workforce) were employed, down 56,000 from August including 7,991,000 employed full-time, down 160,000, and 4,329,000 employed part-time, up 104,000.
• Fewer Australians looking for work:
  1,828,000 Australians were looking for work, down 152,000 from August.
  There were fewer people looking for full-time work, down 36,000 to 732,000 – the fifth straight month of declines for this indicator since peaking in April over 1 million, fewer looking for part-time work, down 116,000 to 1,096,000.

Roy Morgan’s unemployment figure of 12.9% for September is significantly higher than the current ABS estimate for August 2020 of 6.8%. 

However, the ABS figure for August estimated a large decline in the size of the workforce since March which they said was down 232,000.

The ABS also counted an additional 152,000 Australians who were working zero hours in August as ‘employed’; people who ‘had no work, not enough work available, or were stood down’. If these non-workers are added the ABS unemployment estimate for August increases to 1.33 million (9.7%).

Michele Levine CEO, Roy  Morgan says:

“Unemployment decreased in September driven by falls across all States apart from locked down Victoria with unemployment virtually unchanged on a month ago at 12.1%. However, the drop in unemployment was driven by a contracting workforce rather than a surge in new jobs.”

In September, unemployment decreased across all States except locked down Victoria which was virtually unchanged on a month ago at 12.1% with a further 8.7% under-employed.

On a State based level the biggest decreases in unemployment in September were in the States which are the most open – New South Wales and South Australia – which now clearly have the lowest unemployment rates in the nation at around 11%.

Although unemployment decreased in other States those with the toughest border restrictions – Queensland, Western Australia and Tasmania all have unemployment rates of at least 15% in September. 

Encouragingly, Roy Morgan reports that in recent days there have been signs that the border closures in these three States are set to be reduced as Federal Government economic support is tapered.

Queensland is set to fully re-open to New South Wales at the end of October, Western Australia is set to allow visitors from Victoria to complete two weeks of self-quarantine, and Tasmania is set to re-open its borders to most of Australia in three weeks’ time.”

NSW and South Australia drive the fall in unemployment and NSW again has the lowest of all.

A look at the trends on a State-based level shows unemployment decreasing in all States except Victoria – which has spent the last three months in either Stage 3 or 4 lockdown with residents confined to their homes.

NSW and South Australia had the largest declines in unemployment in September and remains well below the national average in both at around 11%.

There were declines in unemployment for the ‘locked down’ States of Queensland, Western Australia and Tasmania but all three still have high rates of unemployment of at least 15% for the second straight month.

About Michael Yardney Michael is a director 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.