Australia's jobs report beats yet again

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Australia’s labour market continues to impress with employment rising strongly for a seventh consecutive month in September.

According to the Australian Bureau of Statistics (ABS), employment rose by 19,800 in September in seasonally adjusted terms, topping forecasts for an increase of 15,000.

The increase left total employment at 12,290,200, the highest level on record.

It’s now increased in each of the past 12 months, adding a whopping 371,500 workers in the process. That’s an average of 31,000 per month.

Most of those employment gains have been achieved in just the past seven months with 273,000 people finding employment.

The current stretch of consecutive gains is also the longest since July 1994.

Within the monthly figure, full-time employment increased by 6,100, outpaced by an increase in part-time employment of 13,700.

Over the past year, 316,000 workers found full-time employment, overshadowing a smaller increase in part-time employment of 55,500.

Employment in New South Wales drove the national increase in September, rising by 21,100. Employment also rose in Victoria and Western Australia by 8,900 and 8,300 respectively, offsetting declines in other locations.

Adding to the bullish report card, the ABS said that the number of hours worked rose by 0.7%, or 11.2 million hours, to 1.7182 billion hours.

With employment rising solidly and the participation rate holding steady at 65.2%, the national unemployment rate fell to 5.5%, below the 5.6% level expected.

It now sits at the lowest level since February 2013.

The unemployment rate among men now stands at 5.4%, marginally below that for women at 5.5%. Both figures are the lowest they’ve been since early 2013.

Total unemployment now stands at 711,500, the lowest level since October last year. It fell by 11,800 in September.

Helping to explain why the unemployment rate has not fallen further despite strong levels of hiring over the past year, labour force participation has risen by 366,000, or 2.9%, to 13 million since September 2016.

By state, unemployment fell in New South Wales, Victoria Western Australia and Tasmania, offsetting increases in Queensland and South Australia.

Here’s how the individual states and territories fared in September.

Source: ABS

The increase in employment and hours worked, along with the decline in the unemployment rate, all points to tightening labour market conditions, something that would normally bode well for wage growth in the period ahead.

However, despite the strength in hiring seen this year, economists still think that it will be some time yet until workers see a meaningul lift in wages.

“We don’t think this will prompt a notable pick-up in wage growth anytime soon as spare capacity remains elevated,” said Kate Hickie, economist at Capital Economics.

“The abundance of spare capacity already in the labour market means that even if jobs growth remains strong there will be plenty of slack for some time yet.

“This explains why we expect wage growth to remain around 2% throughout the next year despite the recent improvements in the jobs market.”

Callam Pickering, APAC economist at Indeed, agrees with Hickie’s assessment, noting that the level of underutilisation that exists with the labour market needs to be reduced before wage pressures become evident.

“A high degree of slack across the labour market, despite recent improvements,” he says.

“This helps explain 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.”

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