Australia's labour market
rebounded in November from a weak month prior as employment increased by a much
stronger-than-expected 39.9k, while the national unemployment rate fell from
5.3% to 5.2%. However, with spare capacity remaining elevated and the pace of
employment growth slowing, further monetary easing from the Reserve Bank of
Australia is on the cards in 2020.
Labour Force
Survey — November | By the numbers
- Employment increased by a net 39.9k (seasonally adjusted) in November to clearly outpoint the consensus call for +15.0k. However, October's initially reported decline of -19.0k was revised to show a larger contraction of -24.8k.
- The national unemployment declined from 5.3% to 5.2% (exp 5.3%), unwinding the 0.1ppt increase from October.
- Underutilisation fell from 13.8% to 13.5% and underemployment declined from 8.5% to 8.3% after both measures increased in the previous month.
- The workforce participation rate was steady at 66.0%, in line with the consensus forecast.
- Aggregate hours worked lifted by 0.2% in November (prior -0.2%) to 1.781bn hours, with growth through the year firming from 1.4% to 1.7%.
Labour Force
Survey — November | The details
After two consecutive
softer-than-expected outturns, employment lifted by a net 39.9k surging above
the consensus forecast of 15.0k. This was driven mostly by the part-time
segment (+35.7k), though full-time employment also posted a modest rise
(+4.2k). In annual terms, employment growth was little changed at 2.01% through
the year to November compared to a 1.98% pace in October. Employment growth
appears to have peaked in Q3 at an annual pace of around 2.5%, though even at
this slower pace of nearer to 2.0% it still is in front of growth in the
working age population of around 1.6%Y/Y. Full-time employment growth
firmed slightly from 1.57% to 1.66% in year-ended terms, while the pace of
part-time employment growth moderated from 2.89% to 2.75%.
The participation rate held steady at 66.0% in
November and has been little changed over the second half of 2019, which is in
contrast to the first half where it was on the rise in line with the stronger
pace of employment growth. In the month, the workforce expanded by 23.1k and as
this was exceeded by the rise in employment of 39.9k, the total of unemployed
fell by 16.8k to 708.1k. As such, the national unemployment rate fell from 5.3%
to 5.2% at a headline level, though if taken at two decimal places it declined
from 5.31% to 5.18%; returning to its level from two months earlier. The
broader measures of spare capacity also improved in November, with
underemployment (including workers who want and are available to work more
hours) down from 8.5% to 8.3% and underutilisation (combining the unemployed
and underemployed) declining from 13.8% to 13.5%. However, this only reversed
gains in the previous month and this has been the pattern over recent times.
Overall, both remain at historically elevated levels.
Aggregate hours worked reversed a
decline in the previous month, rising by 0.2% to 1.781bn hours to be up by 1.7%
over the year. Adjusting for the rise in employment, average hours worked per
employee in the month softened a touch from 137.7 hours to 137.5 hours, which
is 0.3% lower than a year ago (137.9 hours).
Turning to the states,
unemployment declined in New South Wales (from 4.8% to 4.7%), Victoria (from
4.8% to 4.6%) and Queensland (from 6.4% to 6.3%), while it was unchanged in
Tasmania (6.0%) and increased in South Australia (from 6.2% to 6.3%) and
Western Australia (from 5.7% to 5.8%).
Employment growth in the month
was led by Queensland (+17.3k) followed by Victoria (+13.7k). Outcomes were
modest in South Australia (+2.6k), Tasmania (+2.4k) and Western Australia
(+0.3k). Employment in New South Wales contracted for the third consecutive month, falling by 2.8k in what has been a noticeably weak finish to 2019,
likely influenced by the downturn in the residential construction cycle. Over
the past year, Victoria and New South Wales have driven national employment
growth.
Labour Force
Survey — November | Insights
Today's employment outturn at +39.9k
was much stronger than expected, but it comes after two consecutive misses on
the consensus forecast in September and October. Also, the decline in
employment in October was revised to show a larger fall of -24.8k. Accordingly,
employment growth has shifted down to a softer pace of around 2.0% in annual
terms, though it still outpaces growth in the workforce of around 1.6%pa. That
is still a broadly positive dynamic for an RBA Board looking to lower spare
capacity in the labour market, but it is less constructive than it was through
Q2 and Q3 of this year. As such, the RBA Board will likely conclude in the new
year that with the unemployment rate still well above its estimate of full
employment of around 4.5% and with employment growth slowing, additional
monetary policy easing will be required.
