The strong run of job creation in Australia this year continues, with one analyst describing as “stellar” today’s employment data which showed more than 54,000 jobs were added last month, most of them full-time.
Data from the Australian Bureau of Statistics (ABS) shows employment rose by 54,200 in August, in seasonally adjusted terms.
The result was well above the median forecast for a further 15,000 jobs to be added.
That left total employment at 12.269 million, easily surpassing the previous month’s record.
Australia’s economy has now added jobs for the 11th straight month — the best jobs growth streak in more than six years.
The July figure for total employment was also revised upwards to 2,214,700, from 12,201,400.
The unemployment rate held steady at 5.6%, in line with forecasts.
After edging lower prior to the release of the report, the Australian dollar popped higher on the data, rising back above US80c.
Royal Bank of Canada strategist Su-Lin Ong said that given the recent run of jobs growth, key labour market indicators will “become increasingly important in the policy debate as we head into 2018”.
“A stellar labour force survey should give the RBA greater confidence that its base case for a lower unemployment rate, firmer wages growth and eventual return to target inflation is on track,” Ong said.
Although the labour force participation rate ticked 0.1% higher to 65.2%, monthly jobs growth in August meant that the number of unemployed people actually fell sligthly to 723,200.
Gains in the August report were led by strong growth of 40,100 in full-time employment, along with a rise of 14,100 in part-time jobs.
For both male and female workers, there was a monthly increase in full-time and part-time jobs in August.
In line with the strong rise in full-time employment, the ABS said the total numbers of hours worked in August rose by 3.9 million (0.23%) to 1.709 billion.
The quarterly underemployment rate — a measure of those are are in work but would like to work more hours — dipped by 0.2% to 8.6%.
Although it was a small decline, the underemployment rate remains broadly elevated which suggests that additional slack still remains in the labour market despite the strong run of jobs growth.
While the rise in employment is expected to reduce spare capacity over time, a higher underemployment rate is generally associated with low wage growth, which impacts the outlook for inflation and by extension interest rates.
The fall in underemployment led to a 0.2% fall in the under-utilisation rate, which combines those who are unemployed and underemployed, to 14.1%.
Callam Pickering, the Asia-Pacific economist at jobs website indeed.com, said that underemployment at current levels “partially explains the ongoing weakness in wage growth, and indicates that the economy still has some way to go before the Reserve Bank should tighten monetary policy”.
By state and territory, both Queensland and South Australia recorded a sharp 0.5% monthly fall in unemployment. WA was the only state in which the unemployment rate increased. Here’s the breakdown from the ABS report:
With 11 straight months of growth, solid labour force participation and a healthy rise in full-time jobs, today’s report is yet more evidence that the employment component of the Australian economy is in good shape.
It follows continued strength in other key labour market indicators, with ANZ’s job ads index recently climbing for the sixth straight month.
Noting the still-high levels of underemployment and underutilisation, Pickering added a note of caution in his assessment of today’s report.
“It remains difficult to square away these strong employment figures with such low consumer confidence. Normally strong employment growth is associated with improving sentiment,” Pickering said.
“This could reflect ongoing weakness in wage growth or high debt levels but it suggests that the conditions on the ground are perhaps not as rosy as the employment figures suggest.”
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