Australia’s jobs report for January will be released later today, providing a snapshot of how the labour market was faring in early 2019.
Fitting with most leading labour market indicators, it’s expected to be pretty good with another solid increase in employment expected.
With traders continuing to bet on a RBA rate cut by the middle of next year, today’s report carries the potential to generate short-term volatility in financial markets, especially if stronger-than-expected.
Here’s the state of play.
- In December, employment rose by 21,600, topping expectations for an increase of 18,000.
- Part-time employment jumped by 24,600, masking a 3,000 decline in full-time workers. It was the second month in a row that full-time employment fell.
- Total hours worked inched higher, lifting by 0.1% to 1.7589 billion hours.
- Over the year, full-time jobs increased by 162,000, outpacing a 106,600 lift in part-time employment.
- With Australia’s labour force growing by 7,500 over the month, slower than the increase in employment, unemployment fell to 5.0%, the lowest level since June 2011.
- The number of unemployed workers fell by 14,100 to 666,700.
- The participation rate dipped to 65.6%, down 0.1 percentage points from November.
- The employment-to-population ratio — capturing the proportion of Australia’s working age population in employment — rose 0.1 percentage points to 62.4%, leaving it at the highest level in a decade.
- The underemployment rate — measuring those workers with a job but who would like to work more hours — fell by 0.1 percentage points to 8.4% after seasonal adjustments.
- Combined with unemployed workers, the underutilisation rate fell by a larger 0.2 percentage points to 13.3%, reversing an increase seen in November.
- 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, another solid jobs report is expected.
- The median economist forecast looks for an increase in employment of 15,000. Individual forecasts range from a gain of anywhere between 5,000 to 27,000.
- With the participation rate tipped to hold at 65.6%, the unemployment rate is expected to remain at 5%.
- If there is a risk to the unemployment rate forecast, most economists believe it’s to the upside given the characteristics of the outgoing survey rotation group.
- Leading labour market indicators have been mixed ahead of the jobs report — skilled vacancies, Westpac’s unemployment expectations index and the NAB business survey point to continued strength. However, employment readings in PMIs and ANZ job ads have softened noticeably recently.
- The RBA believes recent forward-looking indicators are “consistent with above-average employment growth over the first half of 2019”.
- It is banking on tighter labour market conditions to support household incomes, consumption and a gradual lift in inflation back towards its 2-3% inflation target over the coming years.
- 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, as will growth in hours worked.
The jobs report will arrive at 11.30am AEDT.
Business Insider will have all of the details once it is released.
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