As it stands | Labour Force Survey
Weakness hit the Australian labour market in October as employment contracted by a net 19.0k — its first monthly fall since May 2018 — against expectations for a 16.0k increase. As a result, employment growth in annual terms slowed from 2.5% to 2.0% to be at its softest pace in 2½ years. Even though the participation rate eased from 66.1% to 66.0%, the unemployment rate increased from 5.2% to 5.3% reversing the decline recorded in the previous month. Similarly, underutilsation (13.5% to 13.8%) and underemployment (8.3% to 8.5%) also returned to their levels from August. In line with this weakness, aggregate hours worked fell by 0.2% in the month and annual growth slowed from 1.9% to 1.4%.
For our full review of October's report see here
According to Bloomberg's survey, the consensus call is for employment to rise by a moderate 15.0k in November, with individual estimates ranging between -10.0k and +40.0k. Predicated on the participation rate holding at 66.0% (range: 66.0% to 66.1%), the unemployment rate is expected to remain at 5.3%, with the range of forecasts spread between 5.3% and 5.6%.
The RBA's current forecasts have the unemployment rate tracking sideways around its existing level over the next couple of years, remaining well above its estimate of full employment of around 4.5%. After the weak outturn for employment in October (-19.0k) and the associated sharp slowdown in employment growth (from 2.5% to 2.0%), another softer-than-expected report would strengthen the case for the RBA Board to ease the cash rate further at its next meeting in February. The minutes from December's Board meeting published earlier this week reitereated that tighter labour market conditions are required to generate a faster pace of wages growth that is consistent with inflation lifting sustainably within the target band and in supporting growth in household consumption — the largest component of the domestic economy — returning to trend pace.
