Australia: Easing pace of employment growth – Westpac

Justin Smirk, analyst at Westpac, points out that Australia’s November Labour Force Survey reported a robust bounce of 37.2k gain in total employment following the –24.8k fall in October.

Key Quotes

“In the last three months the average monthly gain was just 9.5k compared to 8.9k in October and 31.2k back in May, a moderation that is consistent with softer domestic demand.”

“In the year employment grew 254.9k or 2.0%. The pace of employment growth has eased from 2.8%yr in May and with the six month annualised pace a slower 1.6%yr, the annual pace is set to fall below 2.0% in December or early 2020.”

“In the month unemployment fell to 5.2% (5.18% at two decimal places) from 5.3% (5.31% at two decimal places). Participation was flat at 66.0% but it did lift modestly from 65.96% to 66.00% at two decimal places which was enough to see a slightly larger than trend rise in the labour force of 23.4k. November also recorded a 0.2ppt fall in underemployment to 8.3%.”

“The mix of employment did, however, suggest a slightly softer picture than the headline numbers. Just about all of the gains were part-time, which lifted 35.7k, while full-time lifted just 4.2k. Nevertheless, total hours work still lifted 0.2% in the month boosting the annual pace to 1.7%yr from 1.4%yr. This pace is, however, softer than the pace of growth in total employment (2.0%yr).”

“Westpac is expecting a modest gradual rise in unemployment and underemployment. We are a long way from the RBA’s full employment aim of 4.5% and if the Bank wants to use monetary policy to drive the economy in that direction, it has a lot more work to do.”