The RBA adjusted down their expectation of the level of unemployment across Australia to 4.2% this week, a level which they expect to remain unchanged for at least two years. Then today we got the latest from the ABS on this frankly fuzzy series of data which showed that the seasonally adjusted unemployment rate rose by 0.1 percentage point to 4.1 per cent in January. 44,000 people found work last month while the number of unemployed increasing by 23,000 people. In short, the jobs market remained “incredibly strong”. That said, some of the increase in unemployment reflected more people than usual with jobs in January who were waiting to start or return to work.
Indeed, the ABS hinted the rise in the unemployment rate in January could reverse in February, saying there were more people than usual with jobs who were waiting to start work last month, but who were technically counted as unemployed.
The employment picture is more complex than might first appear. Given the still high migration levels into Australia, there are more people looking for work, and this is putting the squeeze on some older, perhaps more experienced and therefore expensive locals.
Second, the continued growth of the non-market sector, funded by Governments at federal and state levels means a continued expansion of jobs in specific sectors, like the care sector, but which are not necessarily improving the poor levels of productivity in the economy.
Third as the ABS hints at, the numbers are a bit wobbly given changes to seasonal factors, and also the swapping the sample groups.as well as their strict definition of who is classed as unemployment. Roy Morgan’s alternative method gives a different picture.
Finally, the significant gap between Victoria with unemployment rates of around 4.7%, and other states, suggests that state policy is also important, and on that measure, Victoria is failing again.
Bottom line, overall the jobs market will continue to hold the RBA back from cutting rates again, even if under the hood things are far from rosy. To that extent, words and figures do differ.
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