The momentum in Australia's labour market recovery gathered pace in November with employment again outperforming expectations in rising by 90.0k in the month on a wider reopening effort taking place across the nation. The headline unemployment rate declined to 6.8% from 7.0% as the participation rate jumped above its pre-pandemic level, and hours worked advanced by 2.5% in the month.
Labour Force Survey — November | By the numbers- Employment (on net) increased by 90.0k in November to come in well above the censuses estimate of 40.0k. A minor upward revision saw employment in October adjusted higher by the ABS to 180.4k from 178.8k.
- Australia's unemployment rate declined by 0.2ppt to 6.8%, whereas markets had anticipated it to hold steady at 7.0%.
- A further uplift of 0.3ppt drove the participation rate to 66.1% to a level that now exceeds where it was when the pandemic emerged.
- Total hours worked increased in the month at an accelerated pace of 2.5% to 1.752bn hours, reducing the decline over the year to -1.2% from -3.5%.
Labour Force Survey — November | The details
In a very encouraging report today, employment increased by a much stronger-than-expected 90.0k in November to add more velocity to a recovery that regained momentum with a 180.4k rise in October. Victoria was again the key contributor with a further 74.0k jobs added back to its economy following on from the 81.7k increase in the previous month as the state positioned for reopening from its shutdown. Employment also lifted in New South Wales (23.8k), Western Australia (11.4k) and Tasmania (2.0k), though it declined in Queensland (-20.4k) and South Australia (-0.9k).
This 90.0k gain in national employment was sufficient to drive the unemployment rate lower to 6.8% from 7.0% — even as the participation rate advanced to 66.1% from 65.8%. Remarkably, participation is now higher than it was before the pandemic emerged (was 65.9% in March); a development that speaks to the level of dynamism evident in this economy as it reopens more widely. On top of all of this was a 2.5% rise in hours worked, which is its fastest month-on-month acceleration since June soon after the time when the national shutdown had started to be eased.
In terms of the state of the recovery, employment is now around 1.1% lower than its pre-pandemic level, with around 84% of this year's earlier job losses now restored, while hours worked have improved to be 1.5% lower than their pre-pandemic level from a trough of -10.4%. The key point to note is that hours worked have nearly caught up with employment in this recovery phase in a sign of improving activity across the economy through a broader reopening.
In our preview of today's report, we highlighted that the focus would be on the compositional detail for the employment number. This followed that in October, significant strength in the full-time segment emerged for the first time in the recovery, which, to that point, had been driven by part-time work. The interest was in seeing whether that would continue as a sign of a broadening improvement in underlying economic conditions given that employment and hours worked in the part-time segment were already back to around their pre-pandemic levels. Pleasingly, this is what occurred with full-time employment increasing by 84.2k in the month adding to October's 98.7k gain (revised up from 97.0k). As the chart, below shows, the full-time segment is still lagging well behind part-time on both employment and hours worked, but it has now established considerable momentum as the economic fundamentals have strengthened.
As a result of the surge in full-time work and more hours worked being completed, levels of underutilisation in the labour market have come down. While the unemployment rate fell from 7.0% to 6.8%, much larger declines were recorded in the underemployment rate -1.0ppt to 9.4% and in the underutilisation rate -1.2ppts to 16.2%.
Labour Force Survey — November | Insights
All key measures in the labour market improved in November in an encouraging sign of the momentum and progress in the recovery. The increased strength in full-time employment and rise in participation are both particularly encouraging. Overall, with the economy now opening up more widely with fewer disruptions and restrictions, activity is rebounding and employment and hours worked reflect this. The key in 2021 is to sustain the momentum, with the labour still currently a long way from where it needs to be.
