Unemployment figures raise doubt over rate cut – five ways to interpret yesterday’s data

Official unemployment figures released yesterday have given entrepreneurs and economists some hope for the stability of the domestic economy, with some even suggesting the news will stay the RBA’s hand next month – but the news may not be as good as its seems.

The ABS confirmed yesterday the unemployment rate remained steady at 5.2% in March, adding roughly 44,000 jobs. It’s a solid result and confirms the domestic economy is still somewhat sheltered from international economic turmoil.

But when you dig deeper, the data is more ambiguous, and may suggest parts of the Australian economy aren’t as safe as they seem.

Taken on its own, the 5.2% unemployment result is a positive. But there’s more than one way to interpret data – here are five different ways entrepreneurs could interpret yesterday’s result.

1. The good – 5.2% is a great result

On a superficial level, the unemployment data is solid. A jobless rate of 5.2% while the rest of the world is still reeling from a recession gives the Government plenty of ammunition – and rightly so.

Australia is close to full employment, and yes, while there are plenty of pressures in a number of industries, and structural shifts are shaking the economy a little, people still have jobs. Which means they’re paying down debt, and are ready to spend money when confidence picks up.

2. Nothing’s changing

On the other hand, this isn’t a big improvement at all. For one thing, unemployment is flat. You’d hope to see that number going down a little if we were in a better position. And this release comes after unemployment fell by 0.1 percentage points to 5.1% in January, so unemployment has actually picked up in the last couple of months. That may be due to companies terminating Christmas part-time contracts, but it still reflects a weakness in some parts of the economy.

3. The states tell a different story

Averaged out across the entire nation, unemployment is at a nice spot, but state-based it leaves something to be desired. For example, Victoria has the worst unemployment rate out of all the states – it rose from 4.4% in March 2011 to 5.8% in March 2012. That’s a loss of 50,000 jobs.

5.8% isn’t a catastrophic number, but it makes Victoria the worst place to find a job. There are a number of factors impacting the state, including the higher dollar, and it’s just making things worse.

Unemployment, like property data, is extremely location-specific. The nation-wide number may give one story, but when you look closer, certain parts of the country are suffering. 

4. Resources industry hogging it all

There’s no shaking it off – the resources industry is hogging a lot of the employment in this country. The figures show unemployment in Western Australia is down to 3.7% after 4.2% in January, with a participation rate of 76.4%, although that’s down 0.1 percentage points from the previous two months.

Employment is definitely skewed towards certain industries, and with resources taking the lion’s share, weaker sectors such as manufacturing are in for some pain for awhile yet.

5. More full-time jobs, please

Adding jobs to the economy, any type of jobs, is a good thing. But economists would probably like to see more full-time jobs being created instead of part-time or temporary employment.

The figures show full-time employment increased by 15,800 jobs, while part-time employment bested that, adding 28,200 jobs.

There are plenty of reasons why this is so. Businesses may be nervous about adding more full-time employees, or worse, they may just not have enough work to do. Whatever the reasons, part-time employment is taking over, and that’s not necessarily a good thing.