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CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Thursday, 18 August 2016

Unemployment at 3-year low (part-timers)

Part- time jobs

The ABS Labour Force showed total employment increasing to a new high of 11,968,600, but driven by a significant reclassification towards part time work.

A quick look in three parts...

Part 1 - Part-time employment zips higher

Total employment increased by a seasonally adjusted +26,200 in July, with a whopping increase in the total number part time jobs of +71,600.

Perhaps the part-time figures were skewed higher by part-time employment related to the Census, but nobody can be quite sure. 

While the month-to-month survey numbers aren't to be taken literally, this does reflect that almost three quarters of employment growth over the past year appears to have been part-time in nature. 

Total employment has increased by +220,000 or +1.9 per cent over the past year, well ahead of the headline rate of population growth, which should result in a lower unemployment rate.

The participation rate was steady at 64.9 per cent.

Part 2 - Large states lead

Employment growth in July was driven predominantly by a rebound in Queensland (+12,300), but the story of the past year has largely been about which state has added the most part-time positions.

Total employment growth over the past year increased in New South Wales (+89,900), Victoria (+93,000), and Queensland (+25,900). 

South Australia is also now in the black (+12,600), although full-time employment in the state has declined by -3.9 per cent over the past 8 years since July 2008, when the financial crisis kicked in. 

Indeed, the composition of employment growth hasn't been strong anywhere lately in Australia.

Total employment declined in Western Australia and Tasmania over the year to July.

Part 3 - Unemployment rate at 3-year low

Helped by the rise in part-time employment the trend unemployment rate of 5.71 per cent is at its lowest level in 34 months. 

The more volatile seasonally adjusted unemployment rate has pulled back from from 6.3 per cent at the beginning of 2015 to 5.7 per cent by July 2016.

At the state level, in seasonally adjusted terms New South Wales has the lowest unemployment rate (5.2 per cent), ans South Australia the highest, albeit at a much-improved 6.4 per cent. 

Meanwhile Western Australia saw its seasonally unemployment rate jump to 6.3 per cent. 

Plotting the smoother trend figures shows that the rise in part-time employment has helped to keep a lid on the unemployment rates across the board. 

The average number of hours worked increased by 1.1 per cent over the year - but the avergae hours worked per person has declined, while this week's wages data showed that wages growth in both mining and construction is particularly weak. 

The wrap

Overall, an apparently strong headline result masked a rather weak and uninspiring report, with employment growth dominated by part-time gigs over the past year. 

Perhaps election uncertainty played a role in cautious hiring the first half of 2016, but either way bond yields continue to seek out new lows. 

The emphasis on part-time employment goes some of the way to explaining why wages growth has been soft. 

Stockland reported its results this week, noting that the average price per square metre of a lot in Sydney had surged by 40 per cent over a frenetic financial year.

Chief Executive Mark Steinert predicted that house prices would continue to rise in Sydney, Melbourne and Brisbane for "at least the next three years" based upon his three key metrics of employment, interest rates, and housing supply.