The last major Australian economic data release of 2018 will arrive today with November’s jobs report.
Of all areas of the Australian economy right now, none is as important as the labour market, including the outlook for domestic interest rate settings.
If the RBA’s forecasts for stronger GDP growth, lower unemployment and fastest wage, and inflationary pressures in the years ahead are to be replicated, in reality, conditions in the jobs market will almost certainly have to remain firm, particularly at a time when property prices are falling in many parts of the country.
As such, today’s report will be a big one.
Here’s the state of play.
- In October, employment jumped by 32,800, beating market expectations for a smaller increase of 20,000.
- Full-time employment soared by 42,300, more than offsetting a 9,500 decline in part-time workers. Over the year, full-time employment rose by 238,800, outpacing an increase in part-time employment of 69,400.
- Despite the large increase in employment during the month, the unemployment rate held steady at 5.0%, the equal-lowest level in six years.
- The size of Australia’s labour force increased by 37,400 over the month — faster than the gain in employment — explaining why the unemployment rate didn’t fall.
- The labour force participation rate — measuring the proportion of working-age Australians in employment or actively seeking work — increased to 65.6%, up from 65.5% in September.
- Like unemployment, Australia’s underemployment and underutilisation rates also held steady at 8.3% and 13.3% respectively.
- The underemployment rate measures the proportion of the labour force with a job but who would like to work more hours. The underutilisation rate includes both underemployed and unemployed Australians, providing the broadest measure of slack that exists within the labour market.
- The underutilisation ratio has a far stronger inverse relationship to Australian wage pressures in the post-GFC era.
- Today, employment is expected to record another solid increase, but not by enough to lower the unemployment rate.
- The median economist forecast looks for a gain of 20,000. Individual forecasts range from an increase of 10,000 to 35,000. None are looking for a decline.
- The participation rate is expected to hold at 65.6%, leaving unemployment steady at 5% despite the expected solid lift in hiring.
- While the RBA deems the unemployment rate to be the best overall indicator on conditions in the labour market, given the importance of wage growth at present, the underemployment and underutilisation rates will also be closely monitored.
- Earlier this week, the NAB said unemployment could potentially fall below 5% in November given an unusual pattern in the ABS seasonally adjusted participation rate in recent months. Economists at Westpac share a similar view, noting unemployment could fall even of employment growth is weak.
- “The big risk is that we see a soft or small negative print in employment AND a fall in the unemployment rate to 4.9%, which would be the lowest rate since mid-2011,” Westpac said.
The jobs report will arrive at 11.30am AEDT.
Business Insider will have all of the details once it hits the screens.
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