Participation Rate

Aussie labour market still underperforming – March 2017

Overall, the Australian labour market is still underperforming. Employment growth has fallen below the peaks of 2014 and 2015 and is still well below recent growth benchmarks.  There are some areas of “better” performance as of the March 2017 data, but two points put into question whether we are on the path to an improved labour market. First, despite the more recent pickup in employment growth, the current increase in participation is leading to an increase in the number of unemployed persons. While there is a reason to give this the benefit of the doubt, it does appear that employment growth is not high enough to absorb those workers returning to the labour force. Secondly, the welcomed and positive shift to greater growth in full-time employed persons has not been confirmed by the growth in full-time hours worked. Growth in aggregate hours worked has slowed throughout the March quarter.

The top-line seasonally adjusted number was strong – employment grew by +60k persons. This is the largest (seas adjusted) monthly increase since October 2015. I always look at the trend data though, and that was good for the month too. The annual seasonal reanalysis was completed in February, so this changed the ‘shape’ of many trends between the February and March data, but at least our benchmark for 2017 has been set.

Labour market is still underperforming…

Across different measures and benchmarks, the Australian labour market continues to underperform.

First, the trend in the annual growth highlights just how much the growth in employed persons has slowed in the space of the last year.

In March 2016, the total number of employed persons grew by 250k persons (annual) – in March 2017, that growth has slowed to +122k persons. Total unemployed persons are increasing again as more people come back into the labour market:-


Source: ABS

On the positive side, the annual growth in total employed persons has started to improve over the last 3 months. More on this shortly.

Second, annual growth in employed persons is sitting well below the 10-year average benchmark.

The 10 year average measures the average annual growth (in 000’s persons) for March over the last 10 years. The current annual rate of growth in employed persons (at March 2017) is +122k persons versus the average over the last 10 years of +189k.

Source: ABS

This is much worse when you break out full-time (FT) numbers. Annual growth in FT employed persons was a mere +25k persons versus the 10 year average of +102k persons. On the flipside, part-time (PT) employment growth is performing just above the 10-year average, +97k annual growth in PT employed persons versus +86k for the 10-year average. The current annual growth in total unemployed persons is now above the 10-year average – which is not a good thing.

Third, the current growth in the number of employed persons is below that of the labour force.

Comparing the gap between the growth in employment and growth in the total labour force is an interesting way to gauge the ‘strength’ of employment growth. The result of employment growing slower than the labour force is an increase in the number of unemployed persons.

Source: ABS

For most of 2015 and the first half of 2016, employment grew by a greater number than the labour force and unemployment fell as a result. The (now negative) gap between employment and labour force growth since Sept 2016 is not the widest it has ever been, but it does mark a shift to a more negative trend.

One way to view changes in the labour force size is by looking at what population growth adds and the impact +/- of changes in the participation rate. Over the last four (4) months there has been a shift to people coming back into the labour force and it’s this increase in participation that has contributed to the growth in the labour force:-

Source: ABS, The Macroeconomic Project

The exact reason why people are coming back (or left in the first place) into the labour force cannot be answered by this data.

Comparing employment growth to LF growth suggests that employment is not growing fast enough to ‘absorb’ those people coming back into the labour market. It could be a timing issue. Participation has been increasing over the last four months and the current median duration of job search in Australia is 12 weeks (unchanged from a year ago) so it might take a few more months of data to gauge whether unemployment continues to accelerate. But the fact that the median duration of job search hasn’t changed suggests that there hasn’t been much, if any, tightening in the labour market -the same median job search duration suggests that it is neither easier nor harder to find a job overall.

Finally, while employment growth has improved recently, the distribution of that growth among the states has not been broad based.

The annual growth in employed persons has been concentrated in VIC. The problem is that some of the states that had previously been bigger drivers of employment growth (NSW, QLD and WA) have completely underperformed versus the 10-year average:-

Source: ABS

Smaller states have performed better with regard to employment growth – NT, TAS, ACT and SA all performed above the 10yr average but most of that growth has been PT employment (which is still better than no growth).

Are we on the path to a better labour market performance? Have we turned the corner?

There is some evidence of more positive shifts in the labour market performance, but it is mixed.

A better sign is that on a National level, one of the more negative trends in the labour market appears to have reversed in the last five months. Full-time employment is now growing faster than part-time. I say this has been a negative trend because the underemployment ratio at an all-time high suggests that many are turning to PT work out of necessity and actually want more hours of work.

Over the last five months, FT employed persons has grown faster than PT. Below is the monthly change over the last two years:-

Source: ABS

But again, the distribution of this growth in FT employment, especially in this latest quarter is limited. Only two states have contributed to the bulk of this growth in FT jobs – VIC and WA.

Across the states in the latest quarter:-

  • NSW – PT job losses are driving the overall decline in employment for the quarter and FT employment growth has not been high enough to offset this decline. FT employ growth +3.7k persons and PT employed persons -8.6k
  • VIC – FT employment growth +14.1k persons and PT employed persons +1.8k
  • QLD – growth in PT employment has exceeded FT growth in the last 3 months but the trend for FT employment growth is looking positive. Growth in FT employed persons +3k and +10k PT employed persons
  • SA – growth in PT employment has exceeded FT and the trend has become more negative over the last few months. Growth in FT employed persons +0.3k and growth in PT employed persons +3.1k
  • WA – accounted for the largest growth in FT employment across all states – growth in FT employed persons +14.9k offsetting a decline in PT employed persons of -8.2k
  • TAS – an overall positive performance with +0.4k FT employment growth and +0.6k PT employment growth
  • NT – growth in FT employed persons +1.8k and +1.6k PT employed persons
  • ACT – growth in PT employment is just offsetting the decline in FT employment in the latest quarter. FT employed persons -1.2k and +1.3k PT employed persons

The turnaround in employment growth in QLD and WA is notable and NT continues to punch above its weight in the latest quarter. This is to be expected to a certain degree given the rebound in our main export commodity prices. But given these levels of employment growth, only in WA, TAS and NT has unemployment declined in the latest quarter.

While it is a better sign that FT employment has grown (increased income), PT employment growth has unfortunately been slowing and this has impacted overall employment growth in the last few months – the total growth each month (FT+PT) is still well below that of the peaks of 2014 and 2015.

Despite the shift to greater FT versus PT employment growth, the underemployment ratio has continued to rise:-

Source: ABS

In other words, a growing proportion of employed persons (9.1%) wants and is available for more hours. This is an important sign of how much slack still exists in the labour force and possibly how households might be coming under greater income pressure.

There is also a question mark over the rate of growth in FT employed persons – there has been a divergence between the growth in FT employed persons and the growth in FT hours worked over the last few months. 

There has been growth in the number of FT employed persons yet FT hours worked have been slowing and then declining month on month over the last four months:-

Source: ABS

It creates some doubt over which measure is the more accurate representation of the labour market – FT employment growth or FT hours worked?

Seeing hours worked grow faster than employed persons is easier to explain i.e as demand increases, it’s easier/faster/lower risk for firms to extend overtime hours of existing employees rather than expand the workforce, which takes longer. But it’s more difficult to see how we can be adding more FT employed persons, yet FT hours worked are declining. It doesn’t seem to be simply a timing issue – past data shows that the timing of the two measures is fairly consistent, with both measures turning at a similar time. In the chart above, the divergence has been occurring for most of the last half of 2016 and 2017 YTD.

No such divergence exists between the growth in PT employed persons and the monthly decline in PT hours worked:-

Source: ABS

Growth in PT employed persons and PT hours worked have slowed throughout the last half of 2016 to zero growth as of March.

Either way, there is a concerning trend that aggregate hours worked in the economy slowed throughout the March quarter.

Across most measures, the labour market is still underperforming. Employment growth is low, unemployment is increasing, under-employment is still increasing and hours worked is slowing.

 

Australian labour market conditions continue to weaken – Oct 2016

There are, unfortunately, several concerning trends coming out of the October 2016 labour market report. Employment on a National level is declining, annual full-time (FT) employment is declining, part-time (PT) employment growth is slowing and the size of the labour force is declining as a result of falling participation. On the surface it looks like the falling number of unemployed persons is a bright spot in the report. That would be great if it was so, but falling participation is likely masking a higher number of unemployed persons. We don’t know the exact reasons why people are leaving the labour force, but I’m more likely to take a negative view of this outcome due to the number of declining employed persons. The implications of a weak labour market for private sector growth and budget outcomes is important. Slowing private sector credit growth, rising mortgage interest rates and a weak labour market is a combination that doesn’t bode well for private sector growth in Australia.

As always, I use trend data to analyse the labour force. The data points will move around from month to month, but it’s the broader trends that are important to focus on.

Annual growth in employed persons has slowed from +290k in Oct 2015 to +108k in Oct 2016

What a difference a year makes.

The chart below shows how employment growth has been distributed over the last 36 months. The most negative change has occurred over the last 12 months (if you add the monthly change for each of the last 12 months, you’ll get the annual change in employed persons of +108k).

The monthly growth in employed persons has slowed from a peak of +33k in Sept 2015 to National employment declining by -1k persons in the latest month.

Source: ABS

There are two important points about this chart.

Firstly, even though employment growth is declining, it is declining slower than the labour force. This means that, despite the point that employment is declining, the total number of unemployed persons is also declining. This is the labour market situation in a nutshell at the moment. Rather than be counted as ‘unemployed’, people are leaving the labour market and participation is falling. Declining unemployment isn’t a clear sign of an improving labour market when both employment and labour force participation are also declining.

There is a second important point. Declining National employment, even on a monthly basis, is a relatively rare event. Below is the monthly change in total employed persons going back to 1979 – there are only seven (7) periods where National employment declined on a monthly basis:-

Source: ABS

Since 1979, the periods when the monthly change in employed persons was negative were – 81/82, 90/91, 2000, 2003, 2008, 2013 and now. While only two of these periods were officially ‘recessions’, it easy to link each of these periods back some more general economic weakness. The most recent period of ‘weakness’ during 2012/13 (ToT falls/end of mining investment phase, GFC fiscal stimulus was wearing out and the impact of the European sovereign debt crisis), prompted the RBA to cut rates twelve (12) times, or 325bps, between Nov 2011 and Aug 2016. This helped indebted households as well as residential construction and the real estate market. We no longer have twelve rate cuts available to deal with any economic weakness.

Clearly, this current episode of declining employment is not anywhere near the severity of previous periods. But the direction remains concerning.

It would be easy to argue that this is a ‘one month’ data point and is more likely to result in revision in the following month due to the nature of the trend data. But you can break down this National employment trend to FT and PT trends and further still, down to state trends, to see that this is not a recent phenomenon. Some of the larger states have recorded declining employment well before the most recent month – NSW since August 2016, QLD since Jan 2016 and WA since Apr 2016. Employment growth in ACT has just started to dip into negative territory.

The number of FT employed persons declined by 50k over the last year

This is a disturbing part of this current labour market situation – the persistent decline in FT employed persons throughout 2016. This has been the driver behind the decline in overall employment.

Source: ABS

Growth in FT employed persons has been slowing since Sept 2015, turned negative in Jan 2016 and has stayed negative since. Until Sept 2016, the decline in FT employed persons was at least off-set by the growth in PT employed persons. The growth in PT employed persons peaked back in May 2016. Since then, growth in PT employed persons has been slowing such that the decline in FT employment equalled and exceeded any PT employment growth in the last two months. If there is a glimmer of hope, its that the cycle of decline in FT employed persons may have peaked in Sept looking at the chart above.

The state data shows how widespread the decline in FT employed persons has been. On an annual basis, only VIC, SA and ACT have seen any growth in FT employment. But in the latest quarter, the state picture worsens – only SA recorded any FT employment growth:-

Source: ABS

Australia is becoming increasingly reliant on part-time employment. Of total employed persons, 32% are PT employed – this is the highest proportion of PT workers in the data history. The underemployment rate has reached a new high in the August 16 quarter of 8.6%, highlighting that an increasing proportion of the labour force are available for and want more hours of work. It’s a telling point that suggests the shift to PT is not entirely by choice.

Unemployment is declining…but so is labour force participation

In the latest month, total unemployed persons declined by a further 4.15k persons. In the last 12 months, the total number of unemployed persons declined by -45k persons.

Source: ABS

This should be a great highlight of the labour force data – the falling number of unemployed persons. But we are in a situation where employment is declining at a slower rate than the labour force. Going back to the first chart in this post highlights this relationship:-

Source: ABS

The difference between the blue line (employment) for Oct 16 (-1.05k) and the orange line (total labour force) for Oct 16 (-5.2k) equals the monthly change in unemployed persons of -4.15k. As mentioned, this declining unemployment isn’t a clear/consistent sign of an improving labour market when both employment and labour force participation are also declining.

Labour force participation falls to 64.5% – almost back to where it was ten years ago

The other way to measure the changes in the labour force is to estimate what population growth adds to the labour force plus changes in participation. This perspective highlights the severity of the current round of declines in the labour force participation:-

Source: ABS, The Macroeconomic Project

As mentioned in previous posts, its best to ignore the two most recent estimates for underlying population growth – they are always low for the most recent months.

In the last year, I’ve estimated that underlying population growth has added approx. 185k persons to the labour force and the decline in participation has resulted in -122k persons leaving the labour force. This equals the annual growth in the labour force of +63k persons. On a monthly basis, the labour force size has been declining for the last 3 months – driven by declines in participation.

As of Oct 2016, the labour force participation rate is 64.5% – almost back to where it was ten years ago. Since Dec 2015, participation has declined sharply and I estimate this resulted in -125k persons leaving the labour force since then. This has been driven by both male and female workers leaving the labour force, but mostly males (-78k males left the labour force over the last year).

Source: ABS

The decline in participation is potentially masking the real rate of unemployment. If over the last year, participation had remained constant, and employment had continued to fall, it would mean that our unemployment rate could have been as high as 6.5% – not the 5.6% that is quoted. The important point here though is that we don’t know exactly WHY people are leaving the labour force. I’ve previously looked at the decomposition of participation declines by age and gender and by state to at least understand whether we are seeing ‘boomers’ retiring from the labour force or if there was a geographic element to the trends. It will be worthwhile revisiting this analysis once updated data is available.

Looking at the state distribution of participation rate changes shows that the bigger changes in participation have occurred in key mining states such as WA and QLD, but participation is down in all states except VIC on an annual basis:-

Source: ABS

Part of the reason for the fall in participation in WA & QLD is likely to be the result of workers transitioning to other states or jobs as the more labour-intensive investment phase of the mining boom continues to wind down. The latest quarter data suggests some improvement with participation higher in VIC, TAS & NT.

Hours worked confirms the FT and PT employment growth

Hours worked continued to grow for PT employed persons and continued to fall for FT employed persons:-

Source: ABS

The trend in hours worked still looks lacklustre. Even though there is growth in PT employed persons, the growth in PT hours worked is only just above the longer term average. The year on year change (decline) in FT hours worked is well below the longer term average growth in FT hours worked.

Implications

The implications on spending and taxation are large.

We are a few weeks away from understanding the impact of the weakening labour market on tax receipts at the MYEFO. We are well into the first half of the 2016/17 budget year and wages are growing below growth assumptions, participation was forecast to remain at 65% – it’s now fallen to 64.5% and employment was forecast to grow at 1.75% and so far, on a seasonally adjusted basis, employment has fallen by -0.21%. It’s going to take quite a shift in activity to see these trends reverse and accelerate higher by the end of the financial year.

The household budget/income seems vulnerable right now:-

  • Employment has started declining
  • The ongoing shift from FT to PT employment will likely result in lower household income
  • Continued slowing wage growth, where real wages are not increasing fast enough (on aggregate) to sustain the same level of disposable income

The other important source of spending growth in the economy is credit – and private sector credit (driven by business) is not accelerating. This suggests lower private sector growth and employment growth in the near term.

None of this would be a problem, except that we are more indebted than ever before – and we are now also looking down the barrel of rising interest rates. Rising mortgage interest rates will impact those households with variable rate mortgages. If deposit rates also rise, then it will help those with some interest income.

Labour market performance among states is shifting – Feb 2016

The latest labour force data for February 2016 was released last week. Despite the issues around the data, it remains one of the most important pieces of information about the economy. The February release continues to show that employment growth is slowing and has virtually caught up to the slowing labour force growth at a National level. As the gap between employment and labour force growth narrows, the rate of decline in unemployment has been slowing. In this post though, I want to highlight the state based results. There are some sobering insights around the performance of various state labour markets, most notably in NSW. As in a previous post, looking at the state based results is a proxy for tracking the transitioning of the economy. As employment growth in key mining states, such as WA, has been fading, NSW and to a lesser extent, VIC, had been more than offsetting the declines. In fact NSW has accounted for the majority of the National employment growth, especially full time employment, over the last year. This looks to changing.

National overview

National employment growth has continued to slow along with the growth in the labour force. The current cycle of slowing employment growth does not seem to have bottomed yet.

Source: ABS

The narrowing gap between employment growth and labour force growth means that the decline in unemployment is also slowing.

The slowing growth in employment has been driven by slower growth in both full time (FT) and part time (PT) employed persons.

Source: ABS

The slowing of FT employment growth means that both FT and PT employ growth are now at similar levels again.

State labour market indicators

The state employment growth data annual versus latest quarter highlights the degree to which performance among the states has started to shift.

Source: ABS

Over the last year, NSW had ‘over-performed’ in terms of employment growth – the state accounted for 57% of the National growth in employment yet represented 32% of all employed persons. QLD was the only other state that had over-performed on an annual basis in terms of share of employment growth – QLD accounted for 24% of the National annual employment growth and 20% of all employed persons in Australia.

In the latest quarter though, these numbers have shifted. Share of employment growth in NSW is now on par with its share of employed persons – 33% of National employment growth in the latest qtr. QLD now accounts for 33% of National employment growth in the latest quarter, well above its 20% share of employed persons. Vic comes in third, accounting for 28% of National employment growth in the latest quarter, just above its 25% share of all employed persons.

The National employment growth engine has stalled – NSW

The NSW picture becomes more concerning when you break down that employment growth into FT and PT share. In the last year, NSW accounted for a large 86% of the National FT employment growth, well above its 32% share of all FT employed persons.

In the latest quarter, FT employment in NSW has declined.

This is a large turnaround in performance:-

Source: ABS

In the latest quarter, its only VIC and QLD that are making relatively large contributions to National FT employment growth. The other notable state is SA where FT employment has shifted from declining on an annual basis to stabilizing in the latest quarter.

In NSW, the decline in FT employment has not been offset by any increase in PT employment growth either. Furthermore, PT employment growth in NSW appears to have plateaued. The trend looks poor:-

Source: ABS

Despite the fact that FT employment has declined in the last 2 months, total employment is still growing in NSW at just above that of the labour force:-

Source: ABS

This means that unemployment is still falling in NSW. The unemployment rate in NSW has fallen by -0.15%pts in the latest quarter. If you were to just look at the unemployment rate, you’d be misled into thinking that the labour market in NSW was performing OK. But as the gap between employment and labour force growth becomes smaller, it means that the decline in unemployment is also slowing.

VIC – employment growth is still holding on

In VIC, employment data was revised upward from the previous month. The Jan 2016 release had growth of total employed persons in VIC for Jan at 2.0k persons. That Jan growth figure has now been revised up to 4.4k persons. The underlying trend is such that growth in FT employed persons appears to have peaked back in Nov 15 and PT employment growth has been declining since late 2015.

Source: ABS

The overall growth in employed persons in VIC has fallen below that of the labour force and, as a result, unemployment is now growing again in VIC.

QLD – the new growth engine?

QLD is the only other state where employment growth appears to be relatively strong. But the monthly trend shows that PT growth has taken a negative turn. As well, FT employment growth in QLD appears to have plateaued, albeit at a relatively high level:-

Source: ABS

Growth in employment overall remains higher than that of the labour force (that gap is narrowing though), hence unemployment continues to fall in QLD.

Labour market performance in other states

The other states are not showing positive signs of employment growth. Overall employment growth in SA has slowed to that of the labour force in the latest month – this has been driven by a slowdown in growth of PT employed persons (which is no longer growing in the latest month). In TAS, FT and PT employed persons has been declining for over 5 months and that decline has been higher than the labour force growth, so unemployment has started to grow again. Employment has been declining in NT for nine months, in line with the labour force, hence the unemployment change has been small. In the ACT, employment growth has peaked back in Nov 2015, but because the labour force growth has been slowing faster than employment growth, unemployment has been declining.

I’ll cover the labour market in WA shortly.

Unemployment indicators

Across the states, the decline in unemployment has started slowing and, in some states, unemployed persons has started growing again in the more recent time frames:-


Source: ABS

The most notable negative shift has been in VIC. The most notable positive shift has been in WA.

Unemployment rates can be misleading – the case of WA

Quoting an unemployment rate alone can be misleading which is why I never do it on this blog. Take for example, the labour market in WA. According to the previous chart, unemployment has been declining in WA based on the 6mth and latest quarter data. Just looking at the unemployment rate, it appears that unemployment peaked back in Oct 2015 at 6.3%. The unemployment rate in WA has fallen further to 6.1% as of Feb 2016. But this hardly looks like a robust labour market.

In WA, employment is declining, driven by declining numbers of FT employed persons. The growth in PT employed persons has not offset the decline in FT employed persons.

The reason why unemployment is falling in this scenario is that the labour force is declining faster than employment:-

Source: ABS

The declining labour force is the result of falling population and participation in WA. In other words, workers are leaving the state due to a lack of job opportunities, especially in mining. As the size of the working population shrinks, so does demand (for everything) and so does tax revenue.

Labour force – population shifts between the states

Part of what is driving some of these state trends is the shift that has taking place in labour force growth by state.

Source: ABS

The shift from NSW-led growth in the labour force to VIC and QLD-led in the more recent quarter is obvious. Its unclear what is driving slowing labour force growth in NSW. The problem facing VIC now is that employment growth isn’t keeping pace with this growth in labour market – hence the growth in unemployed persons. This will be one to watch.

In QLD, the growth in the labour force has remained above that of employment growth.

Also worth mentioning is WA (as well as TAS and NT) – where the labour force has declined in the latest quarter.

At a National level, there are two reasons why the labour force growth is slowing:-


Source: ABS, The Macroeconomic Project

The first is that underlying population growth has slowed. The chart above shows that what population adds to the labour force has slowed from over 23k persons/month to just over 15k/month. For the moment, I’m ignoring the last two months estimates of population growth in the chart above – they are always low.

The second is that changes in labour force participation are back to detracting from the labour force i.e. people are leaving the labour force. In fact, in the latest quarter, participation rates only increased in QLD and VIC and held steady in SA.

Sample rotation

This slow-down in the labour market has appeared on the radar quite quickly. It’s worth noting that it could be the result of changes to the ABS survey rotation (the incoming survey group having a lower employment to population ratio than the outgoing sample group), rather than a marked deterioration in activity during this time. I’ll remain cautious and keep checking in each month to see how the trends are shaping up.

There is clearly a shift occurring in the dynamics of the state labour markets. This is important because NSW has been such a large and positive driver of the improved National labour market over the last 18 months. It appears that NSW is no long that employment growth engine. So far, it’s not clear that employment growth in the better performing states of QLD and VIC will make up the difference.

Is the performance of the labour market really that good? January 2016

The labour force data continues to raise more questions about its own methodology than it answers about the performance of the labour force. There remains a very wide 95% confidence interval around the ‘true’ change in employed persons between January and December, which is somewhere between a -65k decline in employed persons and a +50k increase in employed persons. But the 95% confidence interval around the ‘true’ unemployment change figure is now just skirting zero at the lower bound, between -9.6k and +70k. So while the interval is wide, it’s starting to be more likely that unemployment increased in January.

There is a different way to present the data to get an idea of how the market is performing. In this post, I will focus on the difference between the monthly change in employed persons and the monthly change in the labour force during the last year. The reason for looking at the labour market in this way is to gain a different perspective on the drivers behind changes in unemployment and to understand the ‘health’ of employment growth over time – is it accelerating or slowing? This provides a different view on the performance of the labour market by state. All does not seem well in NSW, our main employment growth engine. The labour markets in VIC, WA, TAS and NT are also showing some signs of deterioration. The most positive performance is in QLD and ACT, with SA still mixed.

Overall annual employment growth remains over 300k persons

At this point in time, the labour market still looks like it is performing above average on an annual basis, with employment growth well above the 10 year average for January (+186k). Growth in full-time (FT) employed persons continues to exceed growth in part-time (PT) employed persons and total unemployed persons continues to decline across all time periods.

Source: ABS

What you can’t see from this chart is that the annual growth in employment is skewed to one state, with NSW accounting for 56.3% of the National annual growth in employed persons. NSW represents 32% of all employed persons in Australia.

Unemployment continues to fall, but not in all states

The good news is a bit more limited when it comes to the change in unemployed persons, especially when you break it down on a state by state basis and when you start to look at the performance over more recent time periods. It’s really only NSW, SA and QLD where unemployed persons has continued to fall in any large and meaningful way throughout the year (looking at time periods of six months or less).

It looks like unemployment has started falling in WA in the last quarter as well, but this is a function of the labour force growth slowing faster than employment growth. I’ll come back to this point in more detail shortly.

Source: ABS

The mixed performance of total unemployed persons across the states raises some questions of just how widespread this strong labour market performance really is.

When employment grows faster than the labour force, unemployment falls

This is true even when employment growth is slowing faster than labour force growth, which is what has been happening at a National level over the last 5 months:-

Source: ABS

Employment growth has exceeded labour force growth throughout most of 2015. The positive gap between the two measures since August 2015 equals the decline in total unemployed persons during that time of -28.9k persons.

The trend shows that both the growth in employment and the growth in the labour force has been slowing during that time. Whether this is an enduring trend or not remains to be established. But the gap between the two has been narrowing since October 2015 – which means employment growth is slowing faster than the labour force. If this trend continues over the next few months, unemployment could start to grow again on a National basis.

As an aside, why is labour force growth slowing?

The analysis above looks at the labour force as the sum of all employed persons plus all unemployed persons that are looking for work. Another way to view the labour force is by 1) contribution from population growth and 2) contribution from changes in participation. It seems we are seeing less contribution from participation growth over the last six months:-

Source: ABS

The contribution from growth in participation has more than halved since peaking in August 2015. In the last six months, participation has fallen in VIC, SA, WA, TAS and NT.

I’m less concerned with the apparent drop off in population growth over the last two months. This seems to be a regular feature of the data. But there has been a slow-down in what underlying population growth has added to the labour force since its peak in Feb 2008.

But we live in a country where economic fortunes have differed greatly among the states and is in the process of shifting from the mining-led states back towards to the eastern seaboard. It’s worthwhile looking at each state in a bit more detail to understand this transition.

NSW – the main engine driving the so-called post-mining transition is sputtering

The state of NSW has been the strongest performing state in terms of employment growth during 2015. As mentioned above, NSW alone accounted for over 56% of the annual National employment growth in 2015. The current level of annual growth in employment in NSW is extremely strong in historical terms as well – it’s the highest level of annual employment growth on record for NSW. Previous peaks were between +110k and +120k growth in annual employment. The current level of annual employment growth in NSW is +170k employed persons (Jan 2016). This is almost on par with the National 10 year average in January.

The monthly change in employment growth in NSW has now halved over the last six months from the peak of +17.3k growth in employed persons in May 2015 to +7.9k growth in employed person in January 2016.

Growth in FT employed persons had far exceed growth in PT employment over the last year, with FT employment growth of +142k versus PT employment growth of 28k persons. This has reversed as of December, with PT employment now growing faster than FT on a monthly basis. As of January, FT employment growth has slowed to a very low +2.6k persons – down from the peak of 15.9k as recently as July.

What has ‘saved’ unemployment from growing in NSW is that the labour force growth has also slowed – faster than the slow-down in employment growth.

Source: ABS

Since the peak in labour force growth in June 2015, total unemployed persons has actually declined by 20k in NSW. While this is great news, the gap between the measures is narrowing. This state will be important to watch.

VIC – labour market is deteriorating

There are two problems in VIC. The first is that employment growth during 2015 has been subdued. It’s a big state, representing 25% of employed persons, yet only accounted for 14% of employment growth in 2015. Most of the reason for this seems to be that PT employment has been slowing and is now declining (last 4 months). There are early signs that FT employment may have also peaked in this current cycle. For a short time, unemployment was declining. Which brings me to the second problem. Employment growth has now slowed faster than labour force growth and unemployment has started to increase again in the latest quarter.

Source: ABS

It’s a negative pattern – employment growth is slowing from a low peak and unemployment has started to increase again over the last 3 months.

QLD – labour market performance is good

During 2015, QLD had made a bigger contribution to employment growth than VIC, accounting for 25% of the annual National employment growth. For most of 2015, employment has grown faster than the labour force in QLD resulting in lower unemployment. The trend of the employment growth looks positive too – it has been accelerating. The only thing slowing down employment growth in QLD has been lower PT employment growth. Growth in FT employment is still accelerating.

Source: ABS

Unemployment in QLD continues to fall, but this has slowed to zero in the last two months.

SA – performance has been mixed

Employment in SA has continued to grow, with recent growth on par with previous peaks in growth. But most of the current employment growth has been in PT employed persons, whereas FT employment growth was only positive for the last 4 months of 2015. But at least the growth in PT employment was still higher than the growth in labour force – and unemployment has fallen as a result.

Source: ABS

WA – unemployment falling, but it’s hardly a robust market

This is the frontline of the slowing mining investment engine. While employment has started growing again in the last half of 2015, it is well below recent growth levels.

All of the growth has been PT in nature as well. FT employed persons has declined by 24k persons in the last year, whilst PT employed persons has increased by 28k. Cost cutting continues in earnest, but at least there are PT jobs available.

The decline in the level of unemployed persons is mostly the result of slowing growth in the labour force, rather than strong growth in employment.

Source: ABS

TAS – the labour market has deteriorated

The annual rate of employment growth in TAS has turned negative over the last 3 months. Only for a short period during 2015 was employment growth positive and above the level of growth in the labour force. FT employment continues to decline (-2k FT employed persons), but at least in the last few months there has there been some small level of growth in PT employed persons (not enough to offset the falls in FT employment though).

Source: ABS

Unemployment has started to increase again in the last few months of 2015. The current level of unemployed persons, 17k persons, whilst still elevated, remains below the 2013 peak of 20k persons.

NT – employment is declining and unemployment is miraculously falling

The mining transition continues to hurt NT, with employment declining in the latter half of 2015. Even though employment has been declining on a monthly basis, it hasn’t been declining as fast as the labour force. As a result, the level of unemployment has actually declined over the last six months.

Source: ABS

Just looking at a declining rate of unemployment wouldn’t give you the full story about the labour market in NT.

ACT – labour market is improving

The level of employment growth in ACT had been consistently low throughout 2012-2014. But since the latter half of 2014, and in the latter half of 2015, employment growth has started to accelerate. The current level of employment growth is not high by historical standards, but it’s a good sign that it is accelerating and this is different to many other states. Unemployment has grown on an annual basis because the labour force size has grown faster than employment.

Source: ABS

Another positive sign is that FT employment has overtaken PT employment growth as of October 2015.

It doesn’t take much scratching below the surface to see that in most states, the labour market is no longer as strong as the annual figures suggest. It also highlights the need to review a range of different measures, rather than just relying one figure at a point in time as a gauge of labour market strength. The big watch out at the moment is slowing employment growth relative to the labour force across the bigger population states, especially NSW.

Improved labour market conditions Oct 2015

I normally wouldn’t do a labour market update in consecutive months, but it’s important to set the record straight this month.

The ABS has released the October Labour Force data which now shows a significantly different view of the performance of the labour market during 2015. In my Sept update, I had characterised the labour market as having lost is growth momentum during 2015. Some of the trends I highlighted, in a somewhat sobering labour market update in Sept, have been reversed in the latest data for Oct 2015. It’s not an issue of one ‘outlier’ month of data, it’s that the 2015 YTD data was revised in most cases. For clarity, I am using the trend data series.

The main point from my last two posts was that the annual figures hid some emerging negative trends in the monthly growth statistics. The October data has mostly reversed those more concerning monthly trends. The result is that employment growth is higher and, while employment growth is not accelerating, it has remained consistent throughout 2015 to date. Importantly, employment growth is now higher than that of the labour force, so we are starting to see declines in the level of unemployment. Improvement in participation is still resulting in more workers added to the labour force, but at a slowing rate, due mostly to slowing growth in female participation. There are still a few pockets of concern on a state basis, but nothing as severe as what the Sept data was pointing to.

I’m revisiting the points from my last two posts using the revised data in order to highlight the significance of the change in the ABS data between Sept and Oct and to ensure the analysis reflects the most up to date information.

The Sept data highlighted that on a monthly basis, employment growth had halved since Feb 2015

According to the latest Oct data, employment growth has been averaging 22k a month since Dec 2014. This is far cry from the situation in the Sept data where employment growth had halved since Jan 2015. The chart below compares the same employment growth data from the Sept and Oct releases – the accelerating slow-down in employment growth that was evident in the Sept data is no longer evident in the Oct data.

Source: ABS

The growth in FT employed persons was upgraded by +26k persons YTD, whereas growth in PT employed persons was upgraded by 9k persons for the YTD.

Growth in FT employed persons had also more than halved since Feb 2015

The data released in Oct now shows that growth in FT employed persons has been growing at a much higher level > 10k/month since late 2014.


Source: ABS

The trend still does look like its slowing, but nowhere near the level of deceleration that was evident in the Sept data.

Note that there are still a few states where FT employment is declining in the qtr to Oct 2015 – QLD, SA, NT & ACT.

In Sept, improving levels of unemployment was more a function of labour force growth slowing faster than employment growth

This was the chart I posted in my previous update. I didn’t think that the underlying reasons for the slow-down in unemployment growth, where the labour force growth is slowing faster than employment growth, was a positive indicator. From my previous post:

“This chart also highlights that the overall dynamic of the market is negative – it’s based on slowing growth. To be confident that the economy is growing strongly enough to reduce unemployment, employment growth should be accelerating and be above labour force growth – we aren’t seeing that happen at the moment”

Source: ABS

Fast forward to October. I’ve replicated the chart above using the new data. The new data shows stronger and more consistently high employment growth which is now above growth in the labour force.

Source: ABS

What the new data is telling us is the decline in unemployment is now due to higher employment growth versus the labour force, rather than due to both slowing. But the data does still suggest that this is being helped along by slowing labour force growth. Employment growth isn’t accelerating, but it is still quite high. If participation and population were growing at an increasing rate, then we may not see these improvements in unemployment.

Male employment growth in the short-term looked poor

Using the Sept data, male employment growth had slowed fairly significantly during 2015, especially FT employment growth which had averaged <2k/mth growth since April.

Source: ABS

The chart below highlights how this has now changed in the Oct data. Rather than slowing, growth in FT employed males has been accelerating since May 2015 and is well above PT employment growth. This is a complete turnaround from the situation outlined in Sept – with the exception that male PT employment growth has continued to slow.

Source: ABS

Using the Oct data, the employment situation is looking much better for males. Over the YTD 2015, male participation has improved, employment is growing and unemployment is declining.

NSW driving overall employment growth, especially in the Sept qtr

Even in the revised data, NSW is still the main driver of overall employment growth in Australia. Comparing both the Sept to Oct data for the Sept qtr highlights where the major revisions have occurred.

Source: ABS

The two biggest turnarounds in trend have been in VIC and WA. Employment growth in both states is now starting to accelerate rather than slow or decline.

Employment has grown by a larger degree in the Sept qtr in NSW, VIC, QLD and WA.

Employment growth is still declining in SA and ACT. Employment growth in NT has turned negative in the Oct data release.

The biggest trend change was in VIC. The chart below compares the difference between the two data releases. The latest data (blue line) now has VIC employment growth accelerating. This was a fairly major point from my previous post, given how big and important this state is to the National picture.

Source: ABS

Whilst the level of employment growth in VIC is still low, the trend has improved.

National labour force summary – October 2015

The upshot is that the labour market is looking stronger as of October. Importantly, growth in FT employment is higher than PT across all time periods. The other important feature is that for the first time in 50 months, unemployment is declining on an annual basis.

Source: ABS

The monthly growth trend shows that employment growth remains high, but underlying that remains a slow-down in FT employed persons. It appears that overall employment growth has slowed over the last two months – and this could be a function of the ‘trend’ data series.

Source: ABS

A similar pattern is always evident in the population data in the latest month or two. It usually takes more than two months to establish whether this part of a new trend. The chart below is a good example.

In the latest two months, “what population growth is adding to the LF” (the blue bars) appears to be slowing quickly. But over the YTD, you can see that this component has been fairly stable. We know that population growth is slowing and if we looked at the same chart over a longer time period, slowing population growth is evident since early 2012. But there is no broader market reason for a precipitous decline during the last 2 months.

The other factor impacting growth of the labour force is the change in participation. For the moment, it is slowing growth in female participation that is driving this lower level of contribution of participation to labour force growth.

Source: ABS

Slowing population growth and a slow-down in what participation growth is adding to the labour force is helping to improve unemployment.

The revisions to the labour force data do raise ongoing questions about the data. These issues have been well documented in the past and it seems that the fixes will continue to take time to take effect. The current fluidity of the data highlights the need to benchmark the labour market indicators more broadly.

September – employment continues to disappoint

Overall, there was a continued deterioration in labour market conditions in September.

Despite the recent issues surrounding the collection and reporting of the labour force survey, the results using trend data have remained consistent. I’ve been using the trend series data in my labour market updates for a while now and the pattern of the September data is very much in line with recent trends, albeit slightly worse.

Given my recent post on employment growth, this will be a shorter-than-usual employment update.

The key metrics of employment and unemployment growth continued to weaken in the latest month:-

Source: ABS

The number of people employed Full Time (FT) continued to decline in September and the overall employment growth number was again ‘saved’ by Part Time (PT) employment growth across all time periods.

Unfortunately, the growth in the number of unemployed persons surpassed the growth in FT employed persons in the last month, the last 6 months and in the last year. That’s the state of our labour market at the moment.

Below is the trend of the monthly change in total employed persons that makes up that annual growth figure of +133k growth (figure from chart above) in employed persons – this also highlights a concerning trend.

Source: ABS

The growth in the number of FT employed persons has been slowing all year, after what was quite a promising start to 2014. The growth in PT employed persons has offset these declines in FT employed persons over the last four months, but even the growth in PT employed persons slowed this month. A small positive is that the decline in FT employed persons was slightly smaller than the previous month.

On an annual basis employment growth is not keeping pace with the increase in the labour force due to population growth –

Source: ABS, The Macroeconomic Project

To double check, the 33.9k persons that left the labour force is also calculated by the annual change in the LFPR*estimate of the Working Age Population (WAP) at Sept. The decline of 33.9k persons from the labour force was made up of a -44k decline in males and +11k increase in females.

There remains a deficit between employment growth and the growth in the labour force due to population, especially for what is supposed to be a non-recessionary period – this trend has been in place for several years now:-

Source: ABS, The Macroeconomic Project

As a result, firstly, the number of unemployed persons continues to grow at a fairly consistent pace. There hasn’t been an acceleration in the rate of growth in total unemployed persons, but growth has remained constant.

Source: ABS

This is the 38th month where there has been an annual increase in total unemployed persons. The only time in our history that was longer was the recession of the early 90’s – which was 43 months. Given the current trends, we are likely to surpass that record.

Secondly, the labour force participation rate (LFPR) also declined in Sept, led lower by the continued deterioration in male participation. Since the peak in male participation in Feb 2008, the male participation rate has declined by 2% points. Male participation in now lower than it was ten years ago.

Source: ABS

The growth in hours worked is consistent with these results, with FT hours worked actually declining in Sept v Aug 14 (for the 3rd month in a row) and PT hours growth slowing as well in September.

Source: ABS

The total number of hours worked in the September quarter grew by 0.11%, slower than the June ’14 quarter growth of +0.26%. This slower growth in hours worked suggests that output activity in the domestic economy may have also slowed in the quarter.

At a quick glance, there appears to be a degree of correlation between the change in hours worked and the change in Gross National Expenditure (GNE). The GNE measure is an indicator of domestic output/expenditure activity – its calculated as GDP excluding net exports. I’ve used GNE here specifically because it’s a measure of domestic expenditure activity – which is why there should, in theory, be some correlation with hours worked in the economy.

Using hours worked as a guide, it’s possible that we will see a slow-down in domestic growth in the next quarter:-

Source: ABS

The overall impact on GDP will then depend on the performance of net exports (the external sector) during this quarter.

What this last chart also highlights is how much slower growth in hours worked has been over the last several years, compared to pre-GFC.

All these measures point to slower economic activity in the domestic economy.

 

 

Continued slowdown in the labour market July 2014

The Australian labour force data for July points to a continued weakening in key labour market indicators. The very positive momentum of earlier this year has all but been erased. Employment growth is still better than this time last year, but growth has continued to slow over the last five months. This is not great news for the economy. One of the most important features of the labour market over the last forty-three months has been that employment growth remains well below that which is required to absorb growth in population. This has resulted in a lower participation rate, a higher proportion of PT employed persons and rising unemployment. The total number of unemployed persons remains elevated and is sitting well above GFC levels in terms of actual number and in terms of unemployment rate – yet we aren’t in a recessionary period. A significant and sustained turnaround in employment growth is required in order to turn this situation around. Two important leading indicators of employment growth suggest at least more of the same growth over the next few months. It’s hard to imagine how this situation won’t have an impact on demand, but so far, economic growth is holding up.

Note that all data used here is trend data unless otherwise stated.

National Summary

The National summary provides some mixed highlights:-

Source: ABS

In the most recent month – July v June – the slow-down in employment growth is evident with growth in total employed persons (+4.5k persons) lower than growth in total unemployed persons (+9.4k persons).

The data has been more positive over the last 6 months with FT employment growth the major driver of total employed persons. The return of FT employment growth over the last six months has been a welcome sign in the labour market.

The chart below tracks the month on month changes in total employed, unemployed and changes in the labour force due to participation rate changes. The sum of the last twelve monthly changes equals the annual change, so it provides a more insightful view of which way the indicators are heading underneath the annual and six monthly numbers.

The underlying change in trend over the last five months is obvious:-

Source ABS

Growth in total employed persons has slowed considerably since the Feb 2014 peak and the growth in total unemployed persons has accelerated in that time.

Despite the recent increase in total unemployed persons, the Labour Force Participation Rate (LFPR) has been steady during this time. This represents a big reversal of recent trends. Compare July 2013 – total unemployed grew by 2.7k persons, but the change in the labour force due to the declining participation rate was -12.5k persons (leaving the labour force). Fast forward to July 2014. The total number of unemployed persons grew by 9.5k and the change in the labour force due to an increase in the participation rate was 600 persons. My point is that unemployment is still growing, but people are no longer leaving the labour force (as a response?) and its is unclear what is driving this change in behaviour.

Total Employed Persons

The monthly growth in total employed persons in July was driven by growth in FT employed persons of +6.3k versus -1.8k decline in PT employed persons. Higher growth in FT employed persons (versus PT employed) is usually a very positive sign (more demand, higher incomes etc) but the trend of that growth is concerning – the monthly growth in FT employed persons is slowing down, not increasing (blue trend line below).

Source: ABS

At the same time, growth in PT employed persons is now negative (month on month). Both measures of employment growth are slowing down.

There is also a concerning trend developing in the gender-based view of employment growth.

Whilst total employed persons grew by +4.556k persons, total employed males declined by -1.49k and total employed females grew by +6.046k. Growth in PT employed males has declined month on month over last 5 months and at the same time growth in FT employed males has slowed from a high of +9.8k persons in March to +4.1k persons in July. But it must be noted that growth in FT employed males is higher than it was a year ago.

At the same time, there has been a significant acceleration in the growth of unemployed males and no change in male participation.

Source: ABS

Taking a more long term view, current annual employment growth remains below historical growth benchmarks.

Source: ABS

The ten year average growth in total employed persons for July is +209k persons. The annual growth at July 2014 is currently half that at +110k. Its growth in FT employed persons that is mostly driving this trend. The ten year average growth in FT employed persons is +133k persons and the current annual rate of growth in FT employed persons is +59k – well below half the historical rate.

As a result, the proportion of PT employed persons in the labour market is close to historical highs at 30.3% of those employed are PT employed. This growth in PT employment, starting since the GFC, has undoubtedly saved the unemployment numbers from looking far worse. The all-time high in the proportion of PT employed persons of 30.46% was only reached in January 2014.

Another way to benchmark employment growth is to compare it with the growth in working age population. You could argue that this is the measure that matters the most – is employment growing fast enough to absorb what population growth is adding to the labour force? The short answer is ‘no’.

Ideally the economy should be adding at least enough jobs to match population growth. If the difference is negative, then that difference, people, either become unemployed or leave the labour force (reduction in participation rate). The chart below highlights that over the last forty-three months, employment growth has been lower than what population has been adding to the labour force. This isn’t the only period in our recent history where this has happened, but it is the most prolonged so far:-

Source: ABS

As of July 2014, annual population growth added approx. 214k persons to the labour market, yet total employment only grew by +110k. This left an approx shortfall of 104k persons during this last year. Of this group, 39k left the labour force and total unemployed persons grew by +65k.

As mentioned, this is not a recent trend, as highlighted by the circled area in the chart. This is forty-three consecutive months where employment growth has been lower than population growth that’s been added to the labour force, leaving 331.914k persons either unemployed (+165k persons) or exiting the labour market (-166k persons).

Let’s put that into some context by comparing this current period to other similar periods where employment growth has been lower than what population growth has added to the labour force.

When

# Consecutive Months

Total Shortfall of Jobs to Population added to the LF

# Left Labour Force (net chg)

Change to Total Unemployed Persons

Recession 80’s – Jul 81 – Jun 83

24

422.616k

84k persons

+338k persons

Recession 90’s – Jun 90 – Jun 93

37

594.416k

213k persons

+381k persons

GFC 2008 May 08 – Sept 09

17

228.951k

40k persons

+188k persons

Current period – Jan 11 – July 14 and counting

43

331.914k

166k persons

+165k persons

Source: ABS

The current shortfall is by far, the longest period recorded – forty-three months, but it’s not the most severe in terms of total shortfall. What makes this current period different to the other three highlighted in the table is that this is not related to a recessionary period or event. As a result, unemployment growth has been lower than in any of the other periods, but this has been the second strongest in terms of the fall in labour force participation.

One potential reason for the decline in participation is the ageing population. As workers now move into older age groups, the participation rate will naturally decrease as older workers generally have a lower participation rate – but the assumption is that as older workers move into older age groups, their participation decreases (via retirement). The evidence suggests that whilst the population share of older age groups has increased, so has their participation.

This still doesn’t explain why growth in employment has been well below trend and below what is required to absorb population growth in the labour market. If the effect was purely one of demographic change, it’s not likely that we’d see a corresponding increase in total unemployed persons.

Forward Indicators of Employment Growth

What do some of the forward indicators say about what to expect in employment growth into the near future? The ANZ Job Ad series provides some insight. There is a similar pattern here – there was an improvement in the number of jobs in the latter part of 2013 and a slow down since early 2014.

Source: ANZ http://www.media.anz.com/phoenix.zhtml?c=248677&p=irol-jobad&nyo=0 (b) The trend estimates have been derived by applying a 13-term Henderson moving average to the seasonally adjusted series. This smoothing technique enables estimates to be produced for the latest month, but it also results in revisions to the most recent six months as additional observations become available.

The slow-down in the monthly rate of growth in job ads suggests that employment growth will remain low over the next few months.

The other indicator of what might be ahead for employment growth is hours worked. There is a fairly positive trend in place with regard to growth in FT hours worked in the economy (blue line in the chart below):-

Source: ABS

Here we are starting to see an acceleration in FT hours worked. There is some suggestion that growth in hours leads growth in employment – those working on PT hours increasingly shifting to FT hours where there is demand. This may result in a continued shift from growth in PT to growth in FT employed persons over the next few months.

Total Unemployed Persons

The monthly growth in unemployed persons saw a large jump in July, driven by an acceleration in growth of total male unemployed persons.

Source: ABS

Over the last four months, growth in total unemployed males has been accelerating – male unemployment is now growing at numbers not seen since the GFC.

The longer term averages also show that growth in total unemployed persons is historically high. The ten year average increase in unemployed persons at July is +9.6k persons. The current annual rate of growth at July 2014 is +65k persons. The total number of unemployed persons now exceeds the highs reached in the GFC and the unemployment rate continues to edge up.

Source: ABS

Labour Force Participation

Given the change in the LFPR, the unemployment rate doesn’t really provide the most accurate view of total unemployment in the economy. The current unemployment rate is 6.13%. As alluded to earlier, a relatively large number of persons have left the labour force over the last forty-three months. What is unknown, is the proportion of those that have left the labour force that would be deemed as ‘discouraged’ workers. Over the last forty-three months, I’ve estimated that over 166k persons have left the labour force (for various reasons). In that time the LFPR has declined from an all-time high of 65.65% in Dec 2010 to 64.74% at July 2014. Lower male participation has been the key driver of this trend.

Source: ABS

A declining participation rate may tend to understate the unemployment rate because, if discouraged workers (those that can’t find employment) are leaving the workforce, then they don’t get counted as ‘unemployed’.

The quite large declines in the LFPR of a year ago have stabilized over 2014.

Source: ABS

This has been driven mostly by an increase in female participation during this time. But the month of July was the first month that male participation increased in twenty months (+120 male persons in July v June ’14). This is a fairly significant turnaround from a year ago where both male and females were leaving the labour force. Instead now, we are seeing higher growth in unemployment and a more stable participation rate. It’s unclear what is driving this shift in behaviour – a positive or a negative sentiment? To answer that without any robust data is mere speculation. The trend in participation has switched nonetheless and as long as employment growth stays relatively low and unemployment continues to grow, a more negative view of the labour market will remain in place.