Australia’s December jobs report will be released later today, providing a snapshot of how the labour market was faring late last year.
Mirroring most leading indicators, it’s expected to be pretty good with another solid increase in employment expected.
Given a raft of negative data news on the Australian economy recently, it will have to be if chatter about a potential RBA rate cut later this year is to dissipate anytime soon.
Here’s the state of play.
- In November, the unemployment rate rose to 5.1%, increasing after hitting the lowest level in over six years in October.
- Rather than job losses, the lift was driven by a steep increase in the number of Australians entering the workforce.
- Employment rose by 37,000, smaller than the increase in the size of the labour force which rose by a larger 49,500. As such, the number of unemployed workers increased by 12,500 despite the surge in hiring.
- All of the hiring spree came from part-time employment which increased by 43,400, more than offsetting a decline of 6,400 in full-time workers. Over the past year, full-time employment still rose faster than part-time employment, lifting by 180,200 and 105,500 respectively.
- Mirroring the lift in the unemployment rate, broader measures of labour force underutilisation also increased, pointing to the likelihood of continued sluggishness in wages growth ahead.
- The underemployment rate — measuring those with a job but who would like to work more — rose by 0.2% to 8.5%. Combined with the increase in unemployment, that saw the underutilisation ratio lift to 13.6%, up 0.3 percentage points from a month earlier.
- The underutilisation rate is the broadest measure of slack that exists within Australia’s labour market. It also has a far stronger inverse relationship to Australian wage pressures than the unemployment rate in the post-GFC era.
- Today, economists expect another solid lift in employment, but not enough to see the unemployment rate decline.
- The median forecast looks for an increase of 18,000. With labour force participation expected to remain at 65.7%, that will see the unemployment rate hold at 5.1% without revisions to prior data.
- Leading labour market indicators have been mixed ahead of the jobs report — job vacancies and online job ads both rose strongly late last year although recent PMI reports have softened noticeably.
- Financial markets continue to price around a 50% chance that the RBA cash rate will be cut to 1.25% by November this year.
- HSBC’s Australian economics team says the RBA is unlikely to cut rate unless there’s a sharp deterioration in labour market conditions.
- Based on public statements made late last year, the RBA still believes the next move in the cash rate is likely to be higher, albeit not in the near-term.
The December jobs report will arrive at 11.30am AEDT.
Business Insider will have all of the details once the report is released.
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