Depending upon which of the six main states in Australia you live in the unemployment rate in August was as low as 6.0% in New South Wales or as high as 7.9% in South Australia. On the basis of the latest unemployment rate reading New South Wales is performing well economically, as are Victoria and Western Australia each with sub-national 6.2% unemployment readings of 6.1%. The laggards based on the latest spot unemployment rate reading alone are Tasmania, 6.4%; Queensland, 6.5%; and South Australia 7.9%.
The change in unemployment rates in the states over the 12 months ending August 2015 shows a rather different picture of which states are performing comparatively well. The states showing falling unemployment rates over the 12 month period are Victoria, down to 6.1% in August 2015 from 6.9% in August 2014; Tasmania, down to 6.4% from 7.1% over the same period; and Queensland, down from 6.7% to 6.5%. In contrast, the unemployment rate rose in New South Wales from 5.8% to 6.0% and jumped sharply in Western Australia from 5.0% to 6.1% and in South Australia from 5.9% to 7.9%.
It is hard to judge how well or otherwise the states are performing just on the basis of the unemployment and even combining that with the 12 month change in the unemployment rate. Part of the problem is that the total labour force, comprising those people in employment plus those seeking work, in each state is changing rapidly.
The growth rates in the state labour forces are revealing. By far the biggest jump in state labour in the 12 months to August 2015 was in New South Wales, up by 136,600. A long way second was Victoria, up 41,600 with Western Australia not far behind, up 40,300. The weakest growth rates in labour force over the period were in South Australia, 28,400; Queensland, 16,800 and Tasmania 3,300. Remarkably, the growth in the labour force in New South Wales, up 136,600 was bigger than the combined growth in the labour forces of the other five states of 130,400.
Not only did New South Wales have a massively bigger lift in labour force over the year to August 2015 than any other state it also managed to put the bulk of that lift in numbers to work with employment rising by 118,800 over the period. Victoria was a long way second again with employment up by 63,000 but because employment rose faster than the comparatively weak growth in Victoria’s labour force, up 41,600, that accounts for why Victoria’s unemployment rate seemingly improved so much over the 12 month period.
Employment growth in all other states was genuinely weak over the 12 month period lifting by 22,100 in Western Australia; by 20,800 in Queensland; by 4,900 in Tasmania and actually falling by 700 in South Australia. Again the interesting statistic is that employment growth in New South Wales at 118,800 was greater than the combined employment growth in the other five states at 110,100.
The labour market is only really improving in one state, New South Wales, and even in that state stabilizing the unemployment rate is a struggle because of rapid growth in the state labour force. In all other states employment growth is comparatively weak and the occasional fall in unemployment rate is because labour force growth is even weaker than employment growth. Much of the country is now struggling to generate reasonable employment growth and the stability of the national unemployment rate often referenced by the RBA these days on a closer look seems very fragile.
The risk is on the side of the national unemployment rate starting to climb again over coming months. We see that as a factor driving the RBA to cut the cash rate at least one more time. We still see a 25bps cash rate cut to 1.75% at the early November RBA board meeting.