Labour market conditions continue to improve
Results from the Labour Force Survey (LFS) released by the ABS yesterday indicate that labour market conditions in South Australia continued to improve in July. The total number of persons employed measured in trend terms rose by 1,091 persons (0.1 per cent) in July, while the number of unemployed persons fell by 912 persons (-1.5 per cent). As a consequence of these movements, the trend unemployment rate fell by 0.1 percentage points to 6.6 per cent in July. Despite the improvement, South Australia’s trend unemployment rate remained well above the corresponding national figure of 5.6 per cent, and the highest of any state or territory.
From first appearance seasonally adjusted data provide an even brighter picture of South Australia’s labour market performance in July. The unemployment rate in seasonally adjusted terms fell by 0.4 percentage points to 6.2 per cent. South Australia’s relative labour market performance was also much improved on a seasonally adjusted basis, with the state’s unemployment rate being lower compared to Tasmania (6.3 per cent) and level with Queensland (6.2 per cent). However, the improvement for South Australia was brought primarily by a decrease in participation with the participation rate falling by 0.2 percentage points to 62.2 per cent. This result is surprising given that the recent improvement in labour market conditions should have encouraged people to stay in the labour force. It could in large part reflect statistical noise as month to month movements in the seasonally adjusted labour market data are quite volatile. This is well demonstrated by Tasmania’s seasonally adjusted unemployment rate which rose by 0.7 percentage points in July! It is for such reasons that we do not give much weight to short-term movements in seasonally adjusted LFS estimates, preferring instead to focus on the trend estimates.
In any event, the improvement in South Australian labour market conditions as indicated by both trend and seasonally adjusted data is consistent with other partial indicators of economic activity that suggest solid demand growth has been maintained in South Australia over recent months.
Wages growth remains weak
One area of concern remains ongoing weakness in wages growth. Data from the Wage Price Index released by the ABS yesterday indicates that wages growth remains quite subdued. In original terms, wages in South Australia rose by just 0.2 per cent in the June quarter 2017 to be up 2.1 per cent compared the corresponding period a year earlier. Nationally, wages rose by 0.4 per cent in the June quarter to be 1.9 per cent higher through the year. Wages growth for both South Australia and Australia through the year to June quarter 2017 were at or near their weakest levels as recorded by the WPI (historical data for the WPI stretches back to the late 1990s).
Sales of new motor vehicle sales continue to grow strongly
Latest data on new motor vehicles sales published by the ABS indicates that sales of new motor vehicles in South Australia continue to grow at a solid pace. Sales of new motor vehicles in trend terms rose by 1.2 per cent in July 2017 to be 5.6 per cent higher compared to a year earlier. In comparison, national sales rose by 0.7 per cent in July to be 3.3 per cent higher through the year. Although recent sales of new motor vehicles for South Australia have grown more strongly compared to national sales, they have followed a similar pattern, with sales picking up in 2017 after stagnating in 2016.
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