Unemployment steady but discouraged workers on the rise

The latest figures for unemployment in Australia were released today. This is one of the sets of data you must follow and understand.

While the most important thing is to recognise trends - see our earlier post - the detail of the figures is also important.

A brief overview.
* Unemployment in Australia remained steady at 5.8%.
* Around 31,600 fewer full time jobs were available.
* This was offset by 9,000 part time jobs.
* Around 8,000 were added to the officially unemployed.

 The graphs show that total employment in the last year has peaked and is declining slowly. There is sufficient data here to suggest that the upward trend in employment changed around May 2013 to broadly static employment. It would be too early to declare a falling trend, but that is what we are looking to confirm or deny in the next six months.

The trend in unemployment is clearly upwards. If this trend continues then it does present a cause for concern and policy makers would be expected to act.

A puzzle

Unemployment up by 8,000, part time work up by 9,000, but jobs lost 31,600. What about the other 14,600? What are they doing?

Of course the people who have recently lost their jobs are looking for another one and are counted as unemployed. But the difference in the figures quoted suggests that some people have given up looking for work.

To be counted as unemployed you must be actively looking for work. When you give up looking, because you think there is no hope of finding a job, you have ceased to participate in the labour market.

This is shown in the participation rate. The percentage of working age adults who are either in work or actively seeking work. This is another statistic you must follow.

The 14,600 figure can be accounted for by a fall in the participation rate from 64.8% to 64.6%. Often when unemployment is high and some people have been unemployed for a long time they become discouraged workers and stop looking for a job. This appears to be happening in Australia.

The ABC reports the figures here