It has become abundantly clear that the official unemployment rate of the Australian Bureau of Statistics (ABS) is false.
Recall that the ABS reported an unemployment rate of 3.7% in February, the lowest reading since June 2023:
This week, Macquarie Macro Research published the below chart showing how different measures of job ads and job vacancies have fallen sharply from their peaks:
Job ads have historically shown a strong correlation with the official unemployment rate.
The following chart, which plots Seek job ads against the official unemployment rate, shows that this relationship has broken down:
The situation is even more ridiculous considering Australia’s labour supply explosion amid unprecedented net overseas migration.
As illustrated below, Australia’s civilian population aged over 15 increased by 619,000 in the year to February, representing a growth rate of 2.9%:
This surge in labour supply has driven the number of applicants per Seek job ad more than 50% above pre-pandemic levels, which would historically be associated with a significant lift in the unemployment rate:
Again, the relationship between the two series has broken down.
Finally, separate data based on the number of salary payments into CBA bank accounts suggests that job growth should have fallen sharply, not risen as reported by the ABS:
Whichever way you cut it, Australia’s official unemployment rate of 3.7% is a big lie.
I expect the unemployment rate to rise sharply in the months ahead as it belatedly catches up to the slowing economy.
