LABOUR FORCE COMMENTARY AUGUST 2014
A strong increase in the seasonally adjusted estimate of employment contributed to Australia's unemployment rate decreasing 0.3 percentage points to 6.1% in August 2014 (seasonally adjusted). This follows a comparable increase in the unemployment rate in July. The number of unemployed persons decreased by 33,500 to 755,100 in August 2014 following an increase of 41,800 in July 2014 (seasonally adjusted). In trend terms the number of unemployed persons in August 2014 increased by 8,000 to 764,100 and the unemployment rate was 6.2%. Because of the unusually strong increase in employment estimates, the ABS has extensively checked the data. See 'About the data' for further details.
The seasonally adjusted underemployment rate increased 0.7 percentage points from May 2014 to 8.5% in August 2014. Combined with the August unemployment rate of 6.1%, the latest seasonally adjusted estimate of total labour force underutilisation increased 1.0 percentage points to 14.6% in August 2014. In trend terms, the underemployment rate increased 0.4 percentage points to 8.2% in August 2014 and total labour force underutilisation increased 0.4 percentage points to 14.3%.
August 2014 saw the seasonally adjusted participation rate increase 0.4 percentage points (based on unrounded estimates) to 65.2%. The trend participation rate increased 0.1 percentage points to 65.0% in August 2014.
The seasonally adjusted number of employed persons increased by 121,000 in August 2014 to 11,703,500 persons following a decrease of 4,100 persons in July 2014. The increase in August was driven by part-time employment. The employment to population ratio, which expresses the number of employed persons as a percentage of the civilian population aged 15 years and over, increased 0.6 percentage points to 61.3% (seasonally adjusted).
In trend terms, which reduces the impact of the irregular component of the seasonally adjusted series and can provide a better basis for analysing the underlying behaviour of the series, employment increased by 18,700 persons to 11,638,400 persons in August 2014 and the trend employment to population ratio increased less than 0.1 percentage points to 61.0%.
Employment to population ratio, Persons,
March 2013 to August 2014
Seasonally adjusted part-time employment increased by 106,700 persons to 3,609,200 persons while full-time employment increased by 14,300 persons in August 2014 to 8,094,300 persons. The increase in total employment resulted from increases in:
- male part-time employment, up 65,400 persons
- female part-time employment, up 41,300 persons
- female full-time employment, up 11,900 persons
- male full-time employment, up 2,400 persons.
In original terms total employment usually decreases between July and August (the decreases recorded between these months for the last three years were 117,000 persons, 103,900 persons and 96, 800 persons respectively). The last time total employment increased between July and August was in 1991. Contrary to this historical pattern, employment increased in August 2014 by 32,100. Full-time employment was fairly typical of the historical pattern with a decrease of 79,700 (resulting in a modest seasonally adjusted increase of 14,300) while part-time employment was atypical increasing by 111,800 compared to a decrease in three of the last four years and a highest increase in the previous 20 years of 43,600 in August 1992. This increase in part-time employment was driven by several factors:
- The incoming rotation group reported a higher proportion of part-time employed persons than the rotation group it replaced, and contributed 47,000 to the increase in part-time employment. (However, the incoming rotation group contributed a decrease of 50,100 in full-time employment.)
- Householders who responded in both July and August 2014 (called the matched part of the common sample and shown in the Gross flows in Table 17) reported a net weighted increase of 82,000. For further details see 'About the data'.
- Similar patterns in gross flows were observed across most age groups.
- The increase in part-time employment was observed in all states and territories except the Australian Capital Territory.
Seasonally adjusted aggregate monthly hours worked increased 0.1 million hours (less than 0.01%) in August 2014 to 1,609.5 million hours.
The largest absolute decreases in seasonally adjusted unemployment were in South Australia (down 10,900 persons), New South Wales (down 5,400 persons) and Victoria (down 3,400 persons).
The largest absolute increases in seasonally adjusted employment were in New South Wales (up 45,300 persons), Queensland (up 26,500 persons) and Victoria (up 26,100 persons).
Tasmania had the largest increase in the seasonally adjusted participation rate (up 0.7 percentage points), followed by New South Wales (up 0.6 percentage points) and Queensland (up 0.5 percentage points).
Seasonally adjusted estimates are not published for the territories.
ABOUT THE DATA
Unemployment rate, State and Territories, July 2014 and August 2014
|New South Wales |
|South Australia |
|Western Australia |
|Northern Territory |
|Australian Capital Territory |
|np not available for publication but included in totals where applicable, unless otherwise indicated |
Seasonally adjusted employment - particularly part-time employment - for August 2014 increased significantly and as a result the ABS investigated possible causes. The investigation included the following:
- A new Labour Force questionnaire was introduced in July 2014. As an increase in part-time employment was not observed in July, the new instrument would not have contributed to a change in the reporting of part-time employment in August.
- There were minor wording changes to the monthly Labour Force questionnaire between July and August but these changes did not impact the sequencing leading into or the content of the employment part of the questionnaire and would not have contributed to a change in the reporting of part-time employment.
- The August questionnaire included additional quarterly questions including occupation and industry which were only sequenced to householders identified as employed by the standard monthly questions, and redundancy questions which were asked of all in-scope householders towards the end of the questionnaire. Due to their position in the questionnaire the quarterly questions would not have contributed to a change in the reporting of part-time employment.
- In previous years seven of the eight rotation groups received the Employee Earnings Benefits and Trade Union Membership (EEBTUM) supplementary survey. These supplementary questions were only asked of those householders identified as employed and it was speculated that this contributed to a lower response rate and to the lower employment estimates in original terms usually observed in August. While it is not possible to separately confirm or quantify this impact, the seasonal adjustment process removes calendar related variations, including this impact if it did exist.
- The response rate for August 2014 was similar to historical patterns for August relative to July, indicating that this has not contributed to a change in the reporting of part-time employment.
- While the EEBTUM supplementary survey was not conducted this August, a new supplementary survey, Characteristics of Employment, was conducted and included similar content to the previous supplementary. The supplementary survey is asked at the end of the Labour Force Survey for each householder and is unlikely to have resulted in a change in the reporting of part-time employment.
- A new processing system is being introduced for the Labour Force Survey. The survey responses for August were run on both the existing and new systems and produced the same results.
- Diagnostic checks from the ABS's seasonal adjustment system confirmed that the seasonal factors are stable, although the trend estimates for part-time employed persons and therefore total employed persons are affected by the large August 2014 movement in the seasonally adjusted series. When the original estimates do not follow the usual seasonal pattern additional volatility is included in the seasonally adjusted estimates, as the seasonal factors adapt, over time, to a possible new seasonal pattern.
- The ABS checked a significant number of records with part-time employment to ensure that the processing system had correctly treated these.
- The ABS extensively checked the methodologies used to compile the August 2014 estimates and identified no deficiencies in these methodologies.
Householders who responded in both July and August 2014 (called the matched part of the common sample and shown in the Gross flows in Table 17) reported a net weighted increase, in original terms, of 82,000 in part-time employment. This comprises:
- a net 36,000 increase in part-time employment from not in the labour force, compared to an average move of 21,000 in the opposite direction over the previous three years.
- a net 29,000 increase in part-time employment from full-time employment
- a net 17,100 increase in part-time employment from unemployment.
The total contribution to the increase in part-time employment of the incoming rotation group (47,000) and the matched part of the common sample (82,000) was 129,000, As the total increase in part-time employment in original terms was 111,800 the unmatched part of the common sample and weighting differences contributed approximately negative 17,200.