Is this why unemployment has fallen? Economists reveal what could be behind promising figures after 111,000 jobs were created in a single month
Economists have revealed the reason behind Australia's surprise unemployment figures after 111,000 jobs were created in a single month.
The jobless rate fell from a 22-year high of 7.5 per cent in July to 6.8 per cent in August, the Australian Bureau of Statistics revealed on Thursday.
The number of employed persons sharply exceeded market expectations of a 35,000 fall, as the monthly jobless rate fell for the first time since February.
National Australia Bank chief economist Alan Oster said the 111,000 new jobs created last month simply reflected a surge in the number of people identifying as self employed.
'There was a big spike in those that were basically self employed and not employing anybody,' he told Daily Mail Australia on Friday.
In August, 921,800 Australians were classified as being officially unemployed.
Economists have revealed the reason behind Australia's surprise unemployment figures after 111,000 jobs were created in a single month. Pictured is a Menulog delivery driver in Sydney
Last month, 1,453,734 people were receiving JobSeeker unemployment benefits, separate data from Services Australia, the government agency in charge of Centrelink, showed.
National Australia Bank chief economist Alan Oster said the 111,000 new jobs created last month simply reflected a surge in the number of people identifying as self employed
Mr Oster put this gap down to workers in the aviation and hospital sectors giving up looking for work, as a result of the COVID-19 shutdowns and border closures.
Others in the cafe and restaurant industry are propped up by $1,500 JobKeeper wage subsidies, further obscuring the true extent of unemployment.
'If you could keep people employed, a lot of them would actually get more money by JobKeeper than what they would in terms of their normal employment,' Mr Oster said.
Independent economist Saul Eslake said people who lost their jobs during the earlier coronavirus shutdowns were likely to have obtained an Australian business number.
'At face value, what it suggests is that a not insignificant number of people who had lost their jobs previously have decided to set themselves up as independent contractors,' he told Daily Mail Australia.
Hospitality workers who gave up looking for employment weren't counted in the jobless rate statistics, obscuring the true extent of the jobless crisis. Pictured is a Sydney restaurant in the city with one customer
'More people appear to have done that. We don't know what they're doing, it would appear from the figures they're not doing a lot of it.'
Grattan Institute's chief executive Danielle Wood agreed.
'Buried amongst the surprisingly good jobs figures today ... almost all the increase in employment was for the self-employed,' she said on Twitter.
'Big rise in the gig economy is my guess.'
The ABS defines payroll jobs as being 'employee jobs' for which a payment was reported to the Australian Taxation Office through Single Touch Payroll.
These include the jobs held by employees and owner managers of incorporated enterprises.
The unemployment rate fell from a 22-year high of 7.5 per cent in July to 6.8 per cent last month
Mr O'Donaghoe's comments were echoed by Grattan Institute's chief executive, Danielle Wood, on Twitter
'Owner managers of unincorporated enterprises, the largest component of the employment growth in August, are not covered by payroll jobs measures,' the ABS stated on its website.
'There is also lower coverage of small businesses (<20 employees) in the payroll jobs data than large and medium businesses.
'As a result, the increase in owner managers of incorporated enterprises without employees is also less likely to be reflected in the payroll jobs series.'
Citi economists Josh Williamson and Faraz Syed told ABC that the August data showed 'jobs growth remained solid mid-way through the third quarter' and official forecasts for unemployment rates were 'too pessimistic.'
Unemployment is still, however, higher than March's 5.2 per cent level - compiled before the World Health Organisation declared a coronavirus pandemic.
Women are leading Australia out of the coronavirus recession with unemployment falling in August for the first time since the health crisis began
Nonetheless, joblessness has fallen for the first time since February when the Australian share market peaked despite Melbourne recording the first case of COVID-19 in January.
Jobs recovery at a glance
Unemployment rate fell from a 22-year high of 7.5 per cent in July to 6.8 per cent in August
Participation rate rose from 64.7 per cent to 64.8 per cent
Number employed rose by 111,000 to 12,583,400
Jobless ranks fell by 86,500 with women making up 55,000 or 64 per cent of those
The number of Australians officially without work rose above the one million mark in July for the first time ever but in August, the ranks of the unemployed fell by 86,500 to 921,800 people.
Almost two-thirds, or 55,000 of those were women.
National unemployment also fell in August despite Melbourne, Australia's second biggest city, being placed into a strict, Stage Four lockdown with an 8pm to 5am curfew.
Victoria's unemployment rate of 7.1 per cent was above the national average, as the number of people employed fell by 42,400 as a result of the COVID-19 restrictions.
New South Wales had the lowest unemployment rate of 6.7 per cent.
Tasmania, however, had the lowest unemployment rate among all the states of 6.3 per cent with only the Northern Territory (4.2 per cent) and the Australian Capital Territory (4.2 per cent) having lower jobless figures.
Queensland's jobless figure declined from 8.8 per cent to 7.5 per cent.
Western Australia's equivalent jobless rate dropped from 8.3 per cent to seven per cent.
South Australia's unemployment level remained at 7.9 per cent.
Australia's youth unemployment also fell from 16.3 per cent to 14.3 per cent.