Nullarbor widens as WA leaves rest behind
Perth's economic prospects continue to brighten.
Today's employment figures are the correction we had to have. From March to May, three months of good figures had shown jobs growing at an unbelievably high rate, climbing by 26,000 new jobs a month in seasonally adjusted terms, with unemployment edging down.
Today's estimate that jobs fell 27,000 in June, with unemployment edging up, should be taken just as sceptically.
The labour force survey is a much rougher guide to what is going on in the jobs market than people think. The margin of error in month to month movements is very high, as the Bureau of Statistics keeps trying to tell us.
It says it's 95 per cent confident that the real outcome was somewhere between 10,000 jobs added last month and 65,000 jobs lost.
The ABS tells us to focus instead on its trend figures, which even out the zigs and zags of the seasonally adjusted series to try to work out what's really happening.
And the trend figures show us an economy where jobs are growing, but slowly. Jobs are growing by 12,500 a month, with almost all of that growth in part-time work.
In trend terms, unemployment has been stuck at 5.1 per cent since March. It's not exciting but it's probably closer to the truth.
Even that, however, hides some of the story - two things in particular.
First, the most striking thing about virtually every bit of data on the economy now is the gap between Western Australia and the rest of the country.
The Nullarbor seems to be getting even wider. Unemployment in WA has now fallen to 3.7 per cent on the trend figures, its lowest rate since the start of 2009. The next closest state is NSW where unemployment is 5 per cent. It's 5.4 per cent in Queensland, 5.5 per cent in Victoria, 5.7 per cent in South Australia and 7.3 per cent in Tasmania.
Similarly, in the year to June, in trend terms, the Bureau estimates Australia added just 80,000 jobs, but WA alone added 52,000. NSW added just 21,000 jobs, Victoria 14,000, and employment actually shrank in Queensland, SA and Tasmania.
In full-time jobs, it's even worse. Australia added 29,000 in the year, but WA alone added 52,000: all its jobs growth was full-time, whereas in the rest of Australia, only NSW and Queensland recorded any growth at all in full-time work, and it wasn't much (22,000 and 7500 respectively). Victoria lost a net 27,000 full-time jobs, SA 16,600 and Tasmania 6500.
That's roughly one in 30 full-time jobs lost in South Australia, and one in 25 lost in Tasmania. The Bureau has warned us that it has understated jobs growth in the past year or so, but, it says, not by much.
The jobs market is weak. It's not Greece, where unemployment is over 20 per cent, or even the US, where it's 8.2 per cent, but outside WA, it is failing to provide enough jobs to absorb the growth in the population.
The second detail hidden in these figures is that with job vacancies becoming more scarce, people have stopped looking. The Bureau estimates that in the 18 months to June, the adult population over 15 has grown by 340,000, yet jobs have grown by just 104,000 and full-time jobs by only 42,000. Yet unemployment has risen by only 14,000.
Where have they all gone? Outside the workforce.
The Bureau estimates the number of adults not in work or looking for it has grown by an incredible 223,000 in that time. At the end of 2010 roughly two-thirds of Australia were in the workforce.
Since the end of 2010 roughly two-thirds of our population growth has been among people not in the workforce. That is very hard to believe; but if workforce participation had remained at end-2010 levels, unemployment would now be over 6 per cent.
Today's figures are unlikely to surprise senior officials, since they had been sceptical about the previous month's figures.
Most economists are expecting the Reserve Bank to cut interest rates one more time this year, possibly next month. Today's figures will certainly add to the case for further easing to stimulate growth.