What this measures
The unemployment rate is the share of people in the labour force who are without work and actively looking, from the ABS monthly Labour Force survey. It’s a key gauge of how tight the jobs market is.
How to read this figure
The most criticised feature of this measure is one the Bureau of Statistics meets head on. An hour of paid work in the reference week makes a person employed, and the Bureau accepts that an hour "could be argued to be insufficient to sustain a family or person financially". It defends the line on two grounds: any paid work contributes to production, so the labour statistics stay coherent with the national accounts, and some objective cut-off would be needed whatever the threshold. That threshold is the first of three tests. The other two are that the person actively looked for work in the four weeks to the end of the reference week, where active means steps taken rather than willingness, and that they were available to start. Someone looking but unable to start, because childcare is not yet arranged, fails the third while plainly wanting work.
The published rate is a sample estimate, not a count. About 24,000 dwellings are surveyed, giving roughly 50,000 people, and the Bureau's own convention for reading the result is that there are about two chances in three that an estimate falls within one standard error of what a full enumeration would have found, and about nineteen in twenty within two. No threshold is published at which a monthly move becomes meaningful.
It is also revised through four separate channels, which is unusual for a monthly figure. The estimator combines the previous six months of data with the current month rather than treating each month independently. Seasonal factors are re-estimated every month using all the data then available, so the adjusted series moves. Population benchmarks, the population totals the survey results are scaled up to, are updated quarterly and rebased every five years against the Census. And the trend series is a moving average whose weights are lopsided over the most recent six months, which is exactly where it moves most as new data arrives.
For a household the connection runs through the Reserve Bank's mandate, which is not inflation alone. The Board is directed to pursue price stability and full employment together, and defines the second as the maximum level of employment consistent with low and stable inflation, a level nobody can observe directly. So this figure is one of the two readings a rate decision is argued over, and a labour market that is tightening or loosening is an input to the rate that eventually prices a mortgage.
The release lands on a Thursday, two to three weeks after the reference month it describes.
Longer read: The measures beyond the unemployment rate. The headline rate counts people with no work who are looking for it. Australia publishes four further measures for everyone that definition steps over - people who have work but not enough of it, people who have been looking for a year, and people who have given up.
Related indicators: Inflation rate (CPI) · RBA cash rate · GDP growth - or the whole set on the Australian economy hub. For how figures like this feed into the exchange rate, read what moves the Australian dollar.