Labour Force Survey — September | By the numbers
- Employment increased by a net 14.7k in seasonally adjusted terms in September, which was essentially in line with the market's forecast of +15k. Employment in August was revised up from 34.7k to 37.9k.
- The national unemployment rate retraced its rise in August falling from 5.3% to 5.2%, where the consensus view was for no change this month.
- Underutilisation fell from 13.8% to 13.5% and the underemployment rate declined from 8.5% (revised from 8.6%) to 8.3%.
- Workforce participation eased by 0.1ppt from its record-high of 66.2% to 66.1% (exp: 66.2%).
- Aggregate hours worked lifted by a further 0.2% in September (prior 0.2%) to 1.79bn hours, though the annual pace eased a touch from 2.0% to 1.9%.
Labour Force Survey — September | The details
The nation's unemployment rate declined by 0.6ppt in September to 5.20% when rounding the seasonally adjusted estimates at 2 decimal places. In trend terms, unemployment was steady at 5.25%. The participation rate declined slightly this month from 66.17% to 66.1% (seasonally adjusted), which equated to a modest 6.6k rise in the workforce. With employment rising by a net 14.7k, the unemployed total reduced by 8.1k to 709.6k. The composition of the 14.7k rise in employment was the net result of full-time work increasing by 26.2k and an 11.2k contraction from the part-time segment.
In annual terms, employment growth remains at a robust pace of around 2.5% (full-time 2.2% and part-time 3.0%). Over the past 6 months, employment has risen at an annualised pace of 2.5%, though the 3-month annualised pace of 2.7% implies the momentum has picked up recently.
Indeed, in net terms, employment increased by 87.6k in Q3, which is the strongest quarterly outturn since Q4 of 2017 and is well above the gains of 70.9k in Q1 and 70.0k in Q2. However, despite this, the unemployment rate was little changed over the quarter at 5.20% compared to 5.25% in June. Participation, on net, lifted by around 85.0k in Q3.
In September, the underemployment rate (measuring those employed who want and are available to work more hours) fell from 8.5% to 8.3% and the underutilisation rate (combining those unemployed and underemployed) declined from 13.8% to 13.5%, though both measures lifted slightly by 0.1ppt each over Q3.
For the third consecutive month, aggregate hours worked increased, rising by 0.2% in September, though in annual terms growth is subdued at 1.9%. On average, hours worked per employee lifted by 0.1% in the month to 138.1 hours, however; the annual pace has been declining for 6 consecutive months now to -0.5%, which may help to explain the lack of progress in reducing spare capacity despite employment increasing at a robust pace.
On a state-by-state basis, employment outcomes in the month and over Q3 were led by Queensland with rises of 25.3k and 37.5k respectively. There could be some signs of softness emerging in New South Wales given the state recorded a 23.0k decline in September and a rise of just 7.1k over Q3, though over the past year it has added 96.1k jobs of the 311.6k achieved on a national basis. Victoria has led employment growth over the past year, contributing 103.2k jobs, of which 8.6k came in September and 32.5k in Q3.
In the other states, the outcomes were; Western Australia -5.9k in September (-5.4k in Q3), South Australia +1.5k (+1.1k) and Tasmania +2.2k (+3.8k).
The unemployment rates across the states showed mixed moves in September and over Q3;
- New South Wales +0.2ppt to 4.5% (-0.1ppt in Q3)
- Victoria -0.2ppt to 4.7% (-0.1ppt in Q3)
- Queensland +0.1ppt to 6.5% (unchanged over Q3)
- Western Australia -0.1ppt to 5.7% (unchanged over Q3)
- South Australia -1.0ppt to 6.3% (+0.3ppt over Q3)
- Tasmania -0.2ppt to 6.2% (-0.5ppt over Q3)
Labour Force Survey — September | Insights
Today's report contains little to alter the Reserve Bank of Australia's assessment of the labour market. Though the Board would welcome the strong growth in employment over the quarter, it has also stated it anticipates the pace to slow based on the signals from the forward-looking indicators. Meanwhile, the unemployment rate continues to remain around 5.25% and the broader measures of spare capacity were also little changed over the past 3 months. Markets reacted to the fall in the unemployment rate by pricing out expectations for a November rate cut from around a 40% chance to 20%. This seems a justifiable reaction as there appear to be enough positive signals in the report to prevent the Board from cutting rates on Melbourne Cup day, though before then Q3's CPI report will be released (30/10) and this could be crucial in shaping what happens at the next meeting.