Job seeker surge pushes jobless rate up
Over 160,000 jobs have been created so far this year, but the unemployment rate has again hit a 13-year high as more people enter the labour market.
The unemployment rate unexpectedly jumped to 6.3 per cent in July, the third time it has hit that level in the past year, and its highest point since August 2002.
The total number of people with jobs rose 38,500 in July, the Australian Bureau of Statistics said on Thursday, beating forecasts of a rise of 10,000.
However, Commonwealth Bank senior economist John Peters said jobs growth is not keeping up with population growth.
“Monthly jobs growth over the first seven months has averaged 12,600, which is a little below the required number to keep the unemployment rate flat,” he said.
The participation rate, which refers to the number of people either employed or actively looking for work, rose to a two year high of 65.1 per cent, from 64.8 per cent in June.
The rise was driven by a surge in women entering the workforce, pushing the female participation rate to an all-time record of 59.2 per cent.
Mr Peters said participation growth was strongest in NSW and Victoria, the two states that are enjoying the most robust economic growth.
“Record levels of new residential construction are lifting construction related jobs growth,” he said.
“Indeed, construction jobs growth in the dwelling sector is probably largely offsetting job losses in the mining sector.”
Mr Peters said this explains why the unemployment rate has stabilised just above six per cent but below the peak of 6.5 per cent.
JP Morgan economist Ben Jarman expects the surge in the participation rate was a one-off.
He doesn’t believe there will be a significant rise in the unemployment rate in the coming months.
“Job advertisements, hiring intentions, the NAB business survey, and consumer surveys of the labour market outcomes all suggest a stable to perhaps falling unemployment rate,” he said.
“It therefore seems fair to assume, particularly given the positive signals in the other labour market-related indicators, that the jump in the unemployment rate may not fully stick in future reports.”
However, Westpac senior economist Justin Smirk predicts that the unemployment rate will push higher, because recent businesses surveys show easing hiring intentions.
“Our current forecast for the unemployment rate to peak at 6.5 per cent in late 2015 is based on participation holding around current levels,” he said.
“Some volatility is likely to continue going forward and we believe that without a new kick from the ageing population, the participation rate is likely to oscillate around its current level.”