The nation's labour market performed solidly over 2018 despite a sharp slowdown in economic activity in the second half of the year, as household spending weakened and the downturn in the residential property market gathered pace. In 2019, data has been limited to just 2 reports (covering January and February) in which the usual seasonal volatility coinciding with holidays appeared to be evident. All considered, the labour market appears to have held up since the turn of the year, though there have been signs that conditions have softened somewhat. With that in the past, what matters now is how the data progresses. If it wasn't already, today's report will be crucial in shaping the near-term outlook for a potential RBA easing.
As it stands | Labour Force Survey
February's Labour Force Survey contained mixed detail. Employment increased by a net 4,600, well below the 15,000 increase expected by markets. However, the national unemployment rate lowered from 5.0% to 4.9%, as workforce participation eased from 65.7% to 65.6%. The underemployment rate remained at an elevated 8.1%, though the underutilisation rate declined to a 5½-year low at 13.0%. Rounding out the report, hours worked lifted marginally by 0.2% in the month to be 2.2% higher over the year. For a full review of February's report see our analysis here.
Market expectations | Labour Force Survey
In today's report, the median market forecast is for employment to increase by a net 15,000 around a range from +8,000 to +33,000 according to data compiled by Bloomberg Australia. The unemployment rate is anticipated to edge back up to 5.0%, with the participation rate seen steady at 65.6%.
In today's report, the median market forecast is for employment to increase by a net 15,000 around a range from +8,000 to +33,000 according to data compiled by Bloomberg Australia. The unemployment rate is anticipated to edge back up to 5.0%, with the participation rate seen steady at 65.6%.
What to look for | Labour Force Survey
We can use the forward-looking indicators as a guide for what might happen in today's report. The recent ABS Job Vacancies data, which are followed closely by the RBA, showed that the number of vacancies reported by firms was at a record high in February, though the pace of gains eased to 9.9% in annual terms to be around half of what it averaged in 2018. For the moment, expect employment growth to hold up around its current pace of 2.3% in annual terms, as per the chart (below), though it appears likely to slow further in the months ahead if we are to heed the signals from the job vacancies data. Meanwhile, despite also slowing from 2018 levels, the employment index within the NAB Business Survey in March remained above average and indicated jobs growth of around 20,000 per month.
We can use the forward-looking indicators as a guide for what might happen in today's report. The recent ABS Job Vacancies data, which are followed closely by the RBA, showed that the number of vacancies reported by firms was at a record high in February, though the pace of gains eased to 9.9% in annual terms to be around half of what it averaged in 2018. For the moment, expect employment growth to hold up around its current pace of 2.3% in annual terms, as per the chart (below), though it appears likely to slow further in the months ahead if we are to heed the signals from the job vacancies data. Meanwhile, despite also slowing from 2018 levels, the employment index within the NAB Business Survey in March remained above average and indicated jobs growth of around 20,000 per month.
