Australia Employment Maintains Uptrend, Despite Decrease in May

Labor markets in Australia look prosperous. While this labor force survey shows that the number of people employed fell 41,000 in May, that decline followed sizable rises the two months before. Year-on-year, employment was up 2.0% in May, similar to recent increases and a pick-up from the performance through 2003. Just as notably, the unemployment rate has continued to decline, reaching 5.5% in May, the second lowest in the 26-year history of the survey. The lowest reading was 5.4% in June 1981.

In May, the decline in unemployment in the face of falling employment indicates that overall labor force participation was down, and indeed, the participation rate dipped from 63.9% to 63.5% in the month. This could raise skepticism about the ability of the Australian economy to keep its workforce at work. It appears, though, that this is more probably a temporary blip in the data.

One way to assess this is to examine the extent of the population actually employed. Haver's DLXVG3 software allows us to calculate such an "employment rate". Using the two variables, employment (as the primary or "red" series) and population (as the secondary or "blue" series), we can use the Data Transformation capability (Ctrl-T or directly on the command toolbar) to form this rate, as shown in the adjoining graphs. In the second graph, we see that this rate too fell in May, but April's value, 60.4%, was the highest ever, and even the May reduction leaves intact a pronounced uptrend. Australian labor markets are in fact providing job opportunities for record numbers of their population.