Australia: Strong employment report for August - Westpac

Justin Smirk, Research Analyst at Westpac, points out that it was a robust employment gains in NSW, Vic & Qld as well as a solid lift in participation particularly for females for Australia’s labour force survey for August.

Key Quotes

“Total employment rose 54.2k compared the market’s and Westpac's forecast for +20k. In the month unemployment was flat at 5.6% (5.60% at two decimal places) with a 0.2ppt gain participation driving a rise the labour force.”

“The Australian labour market went through a soft patch in 2016, particularly from Aug to Nov, but the solid uplift seen since has gathered momentum as we moved through 2017. The annual pace accelerated from 0.9%yr in Feb to 2.0%yr gathered further momentum to 2.7%yr in Aug. In the year to Feb total employment had grown 111.2k which has since almost tripled to 325.6k in the year to Aug.”

“Full-time employment bounced 54.2k in Aug following a –19.9k correction in Jul and a 71.1k surge in Jun. In the year full-time employment has gained 251.2k/3.0yr. Part-time employment rose 14.1k following a 49.1k bounce in Jul that followed a –49.4k contraction in Jun. In the year to Aug, part-time employment lifted 74.5k/2.0%yr.”

“By state, NSW Vic and Qld were the main source of strength with total employment gaining 12.9k, 18.6k and 16.7k respectively. Unemployment was flat in NSW (5.0%) and Vic (6.1%) while it fell in Qld (5.7%) and SA (5.7%) and rose in WA (5.9%).”

“The ABS has made some revisions to hours work which now do not appear to be as volatile as they were. In the month hours worked rose 0.4%/2.6%yr.”

“Two further positives can be found in the more secondary data with the decline in underemployment to 8.6% from 8.8% (only released in the mid-month of the quarter) and youth unemployment (12.7% from 12.9%).”

“The Australian labour market has gained quite a bit of momentum and it is now on track to overshoot our leading indicator sometime soon. If the current momentum can be maintained through Q4, and there is no reason to suspect it won't be, the then annual pace is set to be faster than 3%yr. However, rising participation will prevent the unemployment rate from going much lower.”