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Economy in Brief

Labor Force and Employment Gains Strong in Australia; Unemployment Hovers Near Record Low
by Carol Stone September 14, 2006

Employment in Australia rose 23,400 in August from July and has increased every month for the last ten. The year-on-year growth is just 2%, but the 10-month advance has occurred at a 3.2% annualized pace, similar to the 2005 performance.

This employment growth is strong enough to absorb sizable increases in labor force participation and still set record low unemployment rates. Unemployment stood at 4.9% of the labor force in August after touching 4.8% in July; until last August, it had never been as low as 5.0%. The rise in the participation rate includes an upturn among male workers since August 2004 after a secular decline that extends back almost continuously to the beginning of the data series in 1978. The participation rate for women continues to trend gradually higher.

These broad labor force aggregates for Australia were published a week ago. Today, September 14, the Australian Bureau of Statistics published greater detail, including "quarterly" industry data. These industry data depart from the common use of the term quarterly; they are not averages or totals but figures that are simply collected only once a quarter, in the mid-month. Thus are "third quarter" readings already available before the actual end of the period. And in our table below, we show the whole array of data with their mid-month of quarter values to facilitate comparison.

As in many "industrial" countries, Australia's manufacturing sector employment is lagging. However, the latest value, 1,054 persons, is ahead of the year-ago level by 13,000, marking the first year-on-year increase in six quarters. The mining sector seems small with only 139,000 employed in August, but it has been a source of growth particularly in metal ores. We mentioned this general characteristic of the Australian economy a couple of weeks ago (September 1) regarding movements in commodity prices there. Construction is growing vigorously, along with several service industries, especially property & business services and health & community services. Not shown in our table is a spurt in government employment, up 35,700 in the latest quarter, but this reflects temporary hiring for the 2006 Australian census. It will be important to check on Australian labor market conditions after the census has been taken and those temporary employees finish their assignments. ABS suggests that they have not inflated employment totals because many have other jobs already. Stay tuned to see how that plays out.

Australia Labor Force* Q3 2006 (Aug) Q2 2006 (May) Q3 2005 (Aug) 2005 2004 2003
Total Employment (000s) 10,265 10,143 10,067 9,987 9,677 9,481
Unemployment (000s) 524 523 532 537 567 611
Unemployment Rate (%) 4.9 4.9 5.0 5.1 5.5 6.1
Participation Rate (%) 65.1 64.5 64.8 64.4 63.6 63.6
Select Industries (000s)            
Mining 139 133 130 121 103 90
Manufacturing 1,054 1,060 1,041 1,070 1,089 1,082
Construction 899 888 870 867 802 755
Property & Business Services 1,233 1,196 1,197 1,171 1,108 1,112
Health & Community Services 1,072 1,089 1,023 1,013 981 932
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