LABOUR FORCE COMMENTARY JANUARY 2015


NATIONAL ESTIMATES

Australia's unemployment rate increased 0.3 percentage points to 6.4% in January 2015 (seasonally adjusted) with:

• the number of unemployed persons increasing by 34,500 to 795,200,
• the number of employed persons decreasing by 12,200 to 11,668,700, and
• the participation rate remaining steady at 64.8%.

The increase in unemployment in January 2015 in original and seasonally adjusted terms has not been caused by the recent changes to the ABS supplementary survey program. Historically, the ABS had not conducted supplementary surveys in the December and January months, and no supplementary surveys were conducted in December 2014 and January 2015.

The increase in unemployment in original terms is due to:

• a net increase in unemployment in persons who responded to the labour force survey in both December and January (the 'matched sample'),
• a contribution from the incoming rotation group compared to the group it replaced, and
• a contribution from persons who responded in December but not in January and vice versa.

Overall response rates for both December and January were in the ABS's target range of 93% to 95%.

There can be statistical volatility in any sample survey, and it may be that such statistical volatility has contributed to the increase in unemployment. The standard error is a measure of statistical volatility, but it is not possible to be precise about the impact of statistical volatility for any given estimate. However, the ABS will continue to investigate whether it is possible to modify in future its estimation methodology for labour force statistics to reduce its extent. This investigation is consistent with the recommendations of the recent independent review into the Labour Force Survey, but will take some time. Statistical volatility is dampened in the trend estimates, and the ABS encourages users to consider these along with the seasonally adjusted and original series in understanding underlying trends in the labour market.

The last time the unemployment rate increased by 0.3 percentage points or more was in September 2012, when it increased by 0.4 percentage points. On average, an increase of this magnitude occurs once in every twelve months.

In trend terms the unemployment rate was unchanged at 6.3% in January 2015, following an upward revision to the December 2014 estimate. The number of employed persons in January 2015 increased by 15,200 to 11,666,000 and the number of unemployed persons increased by 3,600 to 782,300 in trend terms. The trend participation rate remained at 64.7% in January 2015.

The employment to population ratio, which expresses the number of employed persons as a percentage of the civilian population aged 15 years and over, decreased 0.1 percentage points to 60.7% (seasonally adjusted). In trend terms, the employment to population ratio was unchanged at 60.7%.

Seasonally adjusted full-time employment decreased by 28,100 persons to 8,078,000 persons while part-time employment increased by 15,900 to 3,590,700 persons in January 2015. The decrease in total employment resulted from:

• a decrease in male full-time employment, down 26,000 persons
• a decrease in female full-time employment, down 2,100 persons
• a decrease in female part-time employment, down 1,900 persons
• an increase in male part-time employment, up 17,800 persons.

Seasonally adjusted aggregate monthly hours worked increased 8.2 million hours (0.5%) in January 2015 to 1,607.6 million hours.


STATE ESTIMATES

The largest absolute decreases in seasonally adjusted employment were in New South Wales (down 14,500 persons) and Queensland (down 7,100 persons). The largest absolute increase in seasonally adjusted employment was in Western Australia, up 5,300 persons.

The largest increase in the seasonally adjusted participation rate was in South Australia (up 0.7 percentage points), while the largest decrease was in Tasmania (down 0.4 percentage points).

The largest increases in the seasonally adjusted unemployment rate were in South Australia (up 0.6 percentage points), New South Wales (up 0.4 percentage points) and Queensland (up 0.3 percentage points). The largest decrease in the seasonally adjusted unemployment rate was in Western Australia (down 0.4 percentage points). The ABS recommends using trend estimates to analyse the underlying behaviour of the series.

Seasonally adjusted estimates are not published for the territories.

Unemployment rate, States and Territories, December 2014 and January 2015
	Trend		Seasonally Adjusted
	December	January	December	January
	%	%	%	%
New South Wales	6.1	6.2	6.0	6.3
Victoria	6.7	6.6	6.5	6.6
Queensland	6.6	6.5	6.2	6.5
South Australia	6.8	6.9	6.6	7.3
Western Australia	5.6	5.7	5.9	5.6
Tasmania	6.7	6.6	6.6	6.6
Northern Territory	3.7	3.7	np	np
Australian Capital Territory	4.7	4.5	np	np
Australia	6.3	6.3	6.1	6.4
np not available for publication but included in totals where applicable, unless otherwise indicated

GROSS FLOWS

Gross flows (Table 17) highlight the change in labour force status of individuals between last month and this month. Gross flows are derived from the sample that is common between two consecutive months which, after taking account of sample rotation and varying non-response each month, is approximately 80% of the sample. However, the level and movement estimates produced from the Gross flows will not necessarily represent 80% of the level and movement estimates in a given month from the whole sample. Despite this limitation, analysis of the gross flows data can provide an indication, in original terms, of underlying movements in the labour market.

In original terms between December 2014 and January 2015 the number of persons employed fell by 251,200 with gross flows showing a net fall of 209,900. The fall shown in the gross flows comprised:

• 127,200 persons whose status changed from employed to unemployed,
• 363,700 persons whose status changed from employed to not in the labour force,
• 78,200 persons whose status changed from unemployed to employed, and
• 202,700 persons whose status changed from not in the labour force to employed.

In original terms between December 2014 and January 2015 the number of persons unemployed increased by 104,300 with gross flows showing a net increase of 68,400. The increase shown in the gross flows comprised:

• 78,200 persons whose status changed from unemployed to employed,
• 136,700 persons whose status changed from unemployed to not in the labour force,
• 127,200 persons whose status changed from employed to unemployed, and
• 156,200 persons whose status changed from not in the labour force to unemployed.

As the gross flows data are presented in original terms they are not directly comparable to the seasonally adjusted data discussed elsewhere in the commentary. They do, however, show the usual January fall in employment. In January 2015 the fall in employment in original terms was larger than usual (a decrease of 251,200 persons, compared to an average decrease of 209,100 persons over the previous three years) leading to a fall in employment in seasonally adjusted terms.