Australia’s November jobs report has smashed expectations once again.
According to the Australian Bureau of Statistics (ABS), employment jumped by 61,600 to 12.4 million in seasonally adjusted terms, easily topping forecasts for an increase of 19,000.
It was the largest monthly increase since October 2015, helped in part by a quirk in November data which helped to flatter the headline employment figure.
October’s employment change, originally reported as an increase of 3,700, was also revised up to show a gain of 7,800.
As a result, employment now stands at the highest level on record.
The ABS said the largest increase was in Victoria where employment increased by 32,900, outpacing gains of 28,500 and 8,500 in New South Wales and Western Australia.
Full-time employment jumped by 41,900 to 8.5 million, outpacing a 19,700 increase in part-time employment which rose to 3.9 million.
Reflective of the strong lift in employment, the total number of hours worked by all Australians increased by 9.8 million hours, or 0.6%, to 1.7409 billion hours in seasonally adjusted terms.
In other words, the internals of the jobs report were very, very strong, continuing the underlying trends seen throughout 2017.
Indeed, over the year, full-time employment increased by 304,600, far outpacing a 78,700 increase in part-time employment. Combined, total employment increased by a mammoth 383,300.
To put that figure into perspective, it’s the second-fastest annual increase on record, only surpassed by the 409,200 increase recorded in the year to August 2005.
Despite the surge in employment in November, the unemployment rate held steady at 5.4% courtesy of a massive lift in labour force participation which jumped 0.3 percentage points to 65.5%, leaving it at the highest level since September 2011.
The ABS said that all states recorded higher labour force participation rates from the levels recorded in October.
“The largest increase was in Western Australia followed by New South Wales, Victoria and South Australia,” it said.
The employment-to-population ratio — the percentage of working-age Australians who are currently in employment — increased by 0.2 percentage points to 61.9%, leaving it up 0.9 percentage points from 12 months earlier.
With more Australians entering the labour market, an outcome likely reflecting improved job opportunities, the total number of unemployed Australians increased despite strong employment growth, rising by 4,100 to 707,700.
By state, unemployment fell in Victoria and Tasmania but rose in South Australia and Western Australia. It was unchanged in New South Wales and Queensland.
In trend terms, unemployment fell in the ACT and was steady in the Northern Territory.
Adding to the stellar report card, the quarterly underemployment rate fell 0.2 percentage points to 8.3% in seasonally adjusted terms, an outcome that suggests the labour market is tightening.
It currently sits at the lowest level since February 2016, an encouraging sign for workers hoping for an increase in wage growth.
Underemployment largely captures those Australians who are already employed but who would like to work more hours.
The labour force underutilisation rate — combining both underemployment and unemployed Australians — also fell, dropping to 13.7% in seasonally adjusted terms, a decrease of 0.3 percentage points.
It hasn’t been that low since February 2014.
This too is another measure of labour market slack, with the decrease another sign that wage growth may accelerate in the early parts of 2018.
“We’ll need to see some further declines in underemployment, but if they are forthcoming, wages growth should begin to lift,” said Ivan Colhoun, Chief Markets Economist at the NAB.
While an encouraging sign for workers, Kate Hickie, Australia and New Zealand Economist at Capital Economics, said that more progress in lowering labour market underutilisation will be required in order to deliver a meaningful lift in wage pressures.
“The underutilisation rate is still comfortably above its post crisis average of around 13.0%, so there is still a long way to go,” she said following the release of the report.
“As a result, we expect wage growth will only rise from 2.0% to around 2.5% by the end of 2019.
“That would be well below the pre-crisis average of 3.5%, and is a key reason we expect inflation to remain low for longer than the RBA currently expects.”
However, while Hickie isn’t expecting a strong lift in wages in the near-term, she says that the overall jobs report “leaves little doubt about the current health of the labour market”.
“While such elevated rates of jobs growth are unlikely to be sustained, most leading labour market indicators suggest growth will remain decent in the coming months,” she says.
“In other words, it has been a stellar year for the labour market, which should provide some support to income growth.”