Australia’s October jobs report will be released today.
While employment continues to grow at a decent clip, helping to push the unemployment rate down to a more than six-year low, leading labour market indicators have diverged in recent months, creating some doubt as to whether that positive momentum will continue in the period ahead.
Given the RBA expects the economy will continue to grow by more than 3% next year, helped by steady growth in household consumption, any deterioration in the labour market, even if small, will create risks for its forecasts for faster GDP growth and inflation, and lower unemployment, and hence the outlook for domestic interest rates.
Put bluntly, in the absence an unexpected external shock, the labour market will determine what will happen next.
Here’s the state of play.
- In September the unemployment rate tumbled to 5.0%, down from 5.3% in August, leaving it at the lowest level since April 2012.
- The total number of unemployed workers fell by 37,200 to 665,800, the lowest level since February 2013.
- Employment rose by 5,600 after surging by 44,600 in August.
- Full-time employment increased by 20,300, partially offset by a drop in part-time employment of 14,700.
- Over the year, full-time employment jumped by 217,500, nearly four times faster than the 63,400 increase in part-time employment.
- Along with the modest increase in employment, the size of Australia’s labour force fell by 31,600 over the month, contributing to the steep drop in the unemployment rate.
- Australia’s labour force participation rate — measuring the proportion the working-age population in employment or actively seeking work — fell to 65.4% from 65.7%, leaving it at the lowest level since October 2017.
- The underemployment rate — measuring the proportion of the workforce with a job but who would like to work more hours — was steady at 8.3%.
- Australia’s underutilisation ratio — combining both underemployed and unemployed workers as a percentage of the workforce — fell to 13.3%, down 0.2% percentage points from August.
- In October, economists expect employment growth will increase, although not by enough to prevent a small uptick in unemployment.
- The median forecast looks for lift in employment of 20,000. Individual forecasts range from an increase of anywhere between 10,000 to 30,000.
- Despite expectations for solid employment growth, labour force participation is tipped to increase to 65.5%, seeing the unemployment rate lift to 5.1%.
- The size of the labour force is expected to grow much faster than employment, resulting in a lift in unemployment, essentially.
- There are no forecasts offered for underemployment and underutilisation, although these will be watched closely, especially the latter, given they now have a better relationship to wage growth than the unemployment rate.
- In the year to September, average hourly wages grew by 2.29%, the fastest increase in three years.
- Some economists believe that an underutiliation ratio of below 11% will likely be required to lift annual wage growth back above 3% per annum.
The jobs report will be released at 11.30am AEDT.
Business Insider will have all of the details once it hits the screens.
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