- The Australian economy added 44,000 jobs in August in seasonally adjusted terms, well above forecasts of an 18,000 gain.
- Overall participation levels edged higher, which left the unemployment rate steady at 5.3%.
- Quarterly data on the underemployment – people employed who would like to work more hours – fell by 0.3% to 8.1%.
- Economists said the fall in underemployment is a positive sign, but there is still a long way to go before workers see a meaningful rise in wage growth.
Australian employment data for August comfortably beat expectations.
There were 44,000 jobs added in seasonally adjusted terms, against a forecast gain of 18,000.
The participation rate edged higher by 0.2 percentage points to 65.7%, which meant the unemployment rate held steady at 5.3%.
Gains were driven by another increase in full-time employment, which rose by 33,700 in seasonally adjusted terms. Part-time employment rose by 10,200.
The Australian dollar pushed towards US72 cents immediately following the release, but has since drifted back from its highs.
August’s increase left the total number of employed persons at 12.631 million, a new record high.
In line with the recent monthly volatility, the falls in July were revised lower to 4,300 in seasonally adjusted terms, down from the 3,900 initially reported.
Today’s result included quarterly data on underemployment and underutilisation. In seasonally adjusted terms, the underemployment rate fell by 0.3 percentage points to 8.1%.
That left the underutilisation rate – a sum of underemployment plus the unemployment rate — down 0.4 percentage points at a five-year low of 13.4%.
Underemployment is a measure of labour market slack, and ongoing declines in the underemployment rate will boost the outlook for a long-awaited pickup in wage growth.
Capital Economics chief economist Paul Dales said today’s result “will encourage the RBA that the spare capacity is gradually being used up”.
“Using up this excess supply of labour is a prerequisite for a meaningful rise in wage growth. Progress is clearly being made, but there is a long way to go yet,” Dales said.
“We doubt wage growth will rise from 2.1% now to 2.5% until late in 2020.”
By state, NSW recorded the largest monthly jobs increase in seasonally adjusted terms, with a gain of 43,200. “The largest decrease was in South Australia (down 8,400), the ABS said.
The unemployment rate fell in NSW, Tasmania and Victoria, but increased in WA and Queensland.
Callam Pickering, chief economist at jobs website Indeed, said the decline in the underutilisation rate was “perhaps the best news” to come out of today’s jobs report.
However, he too remains cautious on the outlook for wage growth. And as result, there’s unlikely to be any upward pressure on the outlook for interest rates in the near-term.
“There is mounting evidence that wage growth is on the improve, but we are still a long way from seeing the type of wage growth that will push inflation towards the middle of the RBA’s 2-3% target,” he said.
“The pressure to hike rates will only eventuate when employment growth begins to trigger higher wage growth.”