LABOUR FORCE COMMENTARY NOVEMBER 2015


NATIONAL ESTIMATES

Australia's trend estimate of employment increased by 25,300 persons in November 2015, with:

• the number of unemployed people decreasing by 5,500,
• an unchanged unemployment rate of 6.0 per cent (based on rounded estimates),
• the participation rate remaining at 65.1 per cent, and
• the employment to population ratio increasing by 0.1 percentage points to 61.3%.

The trend unemployment rate remained at 6.1 per cent from March 2015 to September 2015 before decreasing to its current level of 6.0 per cent from October 2015. Over this same period, the trend employment to population ratio, which expresses the number of employed persons as a percentage of the civilian population aged 15 years and over, increased steadily from 60.8 per cent to 61.3 per cent.

Over the past 12 months, trend employment has increased by 293,300 (or 2.5%) and unemployment has decreased by 18,400 (or 2.4%). The trend unemployment rate has remained relatively stable over the year, decreasing from 6.2 per cent to 6.0 per cent, while the participation rate (up 0.5 percentage points) and employment to population ratio (up 0.7 percentage points) both increased.

The trend employment increase of 25,300 persons represents a monthly growth rate of 0.21% which is above the monthly average over the past 20 years (0.15%). This continues the trend in relatively strong employment growth seen since December 2014. In year-on-year terms, the trend employment growth rate is currently at 2.5%, also above the average over the past 20 years (1.8%).

The trend series smooth the more volatile seasonally adjusted estimates.

The seasonally adjusted unemployment rate for November 2015 was 5.8 per cent (down 0.1 percentage points) and the labour force participation rate was 65.3 per cent (up 0.3 percentage points). In 2015, a movement in the participation rate of 0.3 percentage points previously occurred in July, and has occurred (in absolute terms) about once in every six observations across the series.

Seasonally adjusted full-time employment increased by 41,600 persons to 8,205,800 while part-time employment increased by 29,700 to 3,694,800 persons in November 2015. The increase in total seasonally adjusted employment of 71,400 persons to 11,900,600 resulted from:

• an increase in female full-time employment, up 46,800 persons
• an increase in male part-time employment, up 22,500 persons
• an increase in female part-time employment, up 7,300 persons
• a decrease in male full-time employment, down 5,100 persons.

Seasonally adjusted monthly hours worked in all jobs decreased 12.7 million hours (0.8%) in November 2015 to 1,645.9 million hours.

The seasonally adjusted employment to population ratio increased 0.3 percentage points to 61.5% in November 2015.

STATE ESTIMATES

Trend employment growth in November was strongest in absolute terms in New South Wales (up 14,700 persons), and also in relative terms (up 0.4%). The largest annual growth rates in trend employment were in New South Wales (4.4%), and the Northern Territory (2.6%).

In seasonally adjusted terms, the largest absolute increase employment in November 2015 was in New South Wales (up 50,300 persons). This increase represented strong, but not unprecedented, growth of 1.3%.

The trend unemployment rates decreased slightly in four states and territories, remained constant (in rounded terms) in Victoria, and increased slightly in three.

The largest decreases in the seasonally adjusted unemployment rates were in New South Wales and South Australia (both down 0.3 percentage points). The largest increase was in Victoria (up 0.6 percentage points, following a decrease of 0.7 percentage points in October).

The trend participation rates increased slightly in New South Wales, decreased in the Northern Territory and remained constant (in rounded terms) in the other states and the Australian Capital Territory.

In seasonally adjusted terms, the largest increases in the participation rate were in New South Wales and Victoria, both increasing by 0.6 percentage points. The largest decrease in the seasonally adjusted participation rate was in Western Australia (0.5 percentage points, following an increase of 1.0 percentage points in October).

Seasonally adjusted estimates are not published for the territories and the ABS recommends using trend estimates to analyse the underlying behaviour of the series.

Unemployment rate, States and Territories, October 2015 and November 2015
	Trend		Seasonally Adjusted
	October	November	October	November
	%	%	%	%
New South Wales	5.6	5.5	5.5	5.2
Victoria	6.0	6.0	5.6	6.2
Queensland	6.2	6.1	6.1	5.9
South Australia	7.6	7.5	7.6	7.3
Western Australia	6.4	6.5	6.4	6.6
Tasmania	6.3	6.4	6.5	6.6
Northern Territory	4.4	4.3	np	np
Australian Capital Territory	5.1	5.2	np	np
Australia	6.0	6.0	5.9	5.8
np not available for publication but included in totals where applicable, unless otherwise indicated

INSIGHTS FROM THE ORIGINAL DATA

The Labour Force Survey sample can be thought of as comprising eight sub-samples (or rotation groups), with each sub-sample remaining in the survey for eight months, and one rotation group "rotating out" each month and being replaced by a new group "rotating in". This replacement sample generally comes from the same geographic areas as the outgoing one, as part of a representative sampling approach. To understand movements in the original estimates, it is important to consider the contributions from the three components of the sample:

• the matched common sample (survey respondents who responded in both October and November,
• the unmatched common sample (respondents in November but for whom we didn't have a response in October, or vice versa), and
• the incoming rotation group (who replaced respondents who rotated out in October).

After taking account of sample rotation and varying non-response each month, the matched common sample is generally around 80% of the sample. Gross flows are derived from the matched part of the common sample between two consecutive months, and often provide a good guide to underlying changes in the labour market. However, the estimates produced from the gross flows will not necessarily represent 80% of the headline level and movement estimates in a given month. Despite this limitation, analysis of the gross flows data can provide an indication, in original terms, of underlying movements in the labour market.

Analysis of the matched part of the common sample in November 2015 shows that just over 94% did not change their labour force status over the period (with 61% of the matched sample remaining employed, 2% remaining unemployed, and about 32% remaining not in the labour force). Of the 6% that did change their labour force status, around a third entered employment, left employment or moved status outside of employment.

In considering the contribution of the three components of the sample, of the 69,600 increase in the number of employed persons (in original terms), the matched common sample contributed 5,300, while the aggregate difference in the unmatched part of the common sample contributed 11,600, and 52,700 came from the aggregate difference between the outgoing and incoming rotation groups. It is important to remember that the matched common sample describes the change observed for the same respondents between October and November, while the other two components reflect differences between the aggregate labour force status of different groups of people.

While the rotation groups are designed to be representative of the population, the outgoing and incoming rotation groups will almost always have somewhat different characteristics, as a result of the groups representing a sample of different households and people. These differences are generally relatively minor.

The rotation group which was new to sample in November 2015 (the incoming rotation group) displayed a stronger tendency towards both participation and particularly employment than the group it replaced (the outgoing rotation group in October), and a resulting higher participation rate and employment to population ratio. When considering October 2015 and November 2015 together, both months saw incoming rotation groups with employment to population ratios (63.8% and 63.3% respectively), which are relatively high compared to the average of all rotation groups of between 61% and 62% in October and November 2015. This has contributed to the recent strong growth in employment.

It will not be known until after the next month's data have been incorporated if the December incoming rotation group will continue this pattern of a higher than average employment to population ratio.

As the gross flows and rotation group data are presented in original terms they are not directly comparable to the seasonally adjusted and trend data discussed elsewhere in the commentary.