Australia's monthly Labour Force Survey for July is due from the ABS at 11:30am (AEST) this morning. The nation's labour market is in robust shape with the unemployment rate at half-century lows and participation at record highs. Employment and hours worked are now close to 5% above their pre-Covid levels, reflective of the underlying strength in economic activity and its resilience to headwinds from Omicron and the east coast floods earlier in the year.
As it stands | Labour Force Survey
National employment increased by 88.4k in June, printing at a multiple of the expected outcome (30.0k). Full time employment continued to rise sharply (52.9k) and part time employment saw its strongest increase in 7 months (35.5k).
By the spring of last year when large parts of the nation emerged from the Delta wave lockdowns, the unemployment rate stood at 5.2%. Since these reopenings, employment has surged by 750k, driving the unemployment rate down to 3.5% as of June, its lowest level in almost 50 years. Underemployment (6.1%) and total labour market underutilisation (9.6%) have also fallen sharply to historically low levels.
The strength of labour demand has been met by increasing supply response. The participation rate reset to a new record high at 66.8% in June, up almost 1ppt on its pre-Covid level. Meanwhile, the share of the working age population in employment is at its highest level since those records commenced and 2ppts higher than prior to the pandemic.
Growth in hours worked stalled in June (0%m/m) following strong increases in April (1.3%m/m) and May (0.9%m/m). Staff absenteeism remained elevated in the current Covid wave, seeing more than 1.1 million Australians working fewer hours than usual in June due to illness and caregiving reasons.
Market expectations | Labour Force Survey
Consensus on the employment number for July is 25k; the range of estimates is very wide from -10k on the low side to +60k on the high side. The ABS's payrolls series softened in early July, though that is more likely to reflect seasonal factors than underlying labour market conditions. The unemployment rate is forecast to remain at 3.5% (range: 3.4% to 3.5%).
What to watch | Labour Force Survey
Employment in the past two reports has strongly outperformed expectations, so the momentum in the data, together with the strength in indicators of labour demand (job vacancies and NAB Business Survey), point to another upside result coming through for July. The risks to that view look to be from hiring slowing over the end of the financial year period and due to the disruptions caused by the winter Covid wave, though the latter is more likely to have a larger effect on hours worked through absenteeism. The unemployment rate fell sharply from 3.9% in May to 3.5% in June and there is a decent chance of seeing a new low posted in July if another strong employment outcome is achieved.
