The Australian economy is likely to be important to the outcome of the next federal election. While employment growth was strong in all of 2017, it has stalled in early 2018.
Between September 2016 and January 2018, more jobs were added each month, with a total gain of over 520,000 jobs, averaging almost 33,000 jobs gained a month. However, in March 2018 there were over 1,000 fewer jobs than in January, after a slip in February.
Quarterly retail sale volumes rose 0.2% in the March 2018 quarter, down from a 0.8% gain in the December 2017 quarter.
In March, the total value of dwelling commitments was down 4.4% from February at a level well below the previous months. The number of owner occupied dwelling commitments continued to trend down. This fall began before the Banking Royal Commission uncovered some unethical banking practices.
In the March quarter, wages growth continued to be low, at just a 0.5% increase in that quarter, and 2.1% for the year from March 2017 to March 2018. Labor and the unions are campaigning strongly on wage growth, so this will be an important issue at the next election.
The Australian share market has surged owing mainly to higher commodity prices, and Australia had a trade surplus of over $1.1 billion in each of January, February and March. However, the domestic economy does not appear to be doing well in early 2018.
All figures here are seasonally adjusted, and are from the Australian Bureau of Statistics.
In March, Australia’s unemployment rate was 5.5%, while the US unemployment rate was 3.9% in April. It would appear that the US jobs situation is better than Australia’s. However, this is not the case.
I am using the seasonally adjusted US and Australian data here, rather than trend or original data. US data is from the Bureau of Labor Statistics, and Australian data from the Australian Bureau of Statistics.
In the US, the participation rate (the proportion of all those eligible for work who are looking for a job or have a job) was just 62.8%. The Australian participation rate was 65.5%.
The employment population ratio in the US (the proportion of those eligible to work who have a job) was 60.3%. In Australia, it was 61.9%.
If the US participation rate was the same as Australia’s, the US unemployment rate would by about 7.9%, not 3.9%.
A low participation rate makes the bottom line unemployment rate look better than it otherwise would.
The US Bureau of Labor Statistics carries out an establishment survey and a household survey every month. The unemployment and participation rates are derived from the household survey, but the media’s reports of changes in employment are from the establishment survey, based on reports of employers.
In April, the establishment survey showed 164,000 jobs were created, but the household survey suggested a net gain of just 3,000 jobs. The drop in unemployment from 4.1% to 3.9% was entirely based on people leaving the workforce – the participation rate and employment population ratio both dropped 0.1% in April.