Preview: Labour Force Survey — January

The first monthly update on the Australian labour market for 2020 is due to come through from the ABS at 11:30am (AEDT) today. November and December saw employment gains come in sharply above consensus, so markets and the Reserve Bank of Australia will be waiting to see if this trend continued into January.   

As it stands | Labour Force Survey

In December, the labour market surprised to the upside of market expectations for the second straight month as employment lifted by 28.9k; well clear of the median estimate for a 10.0k rise and following on from a 38.5k lift in November. The downside was that the profile was uneven, with part-time employment (+29.2k) accounting for all of December's increase as the full-time segment recorded a small decline (-0.3k). For 2019 as a whole, employment increased by 262.5k, broadly matching 2018's outturn of 269.6k, led by full-time employment (+152.7k) amid a more moderate contribution from the part-time segment (+109.9k). 

As was the case in November, the nation's unemployment rate again declined unexpectedly by 0.1ppt, falling from 5.2% to 5.1% in December to its lowest since March 2019. This came as the participation rate held steady at 66.0%, remaining close to its record high. The underutilisation also declined by 0.1ppt to a 6-month low of 13.4%, though the underemployment rate was unchanged at 8.3%. Rounding out the report, aggregate hours worked lifted by 0.5% in December, with the annual pace rising from 1.7% to 2.3%.    

For a full review of December's report see here 

         

Market expectations | Labour Force Survey

The median forecast according to Bloomberg's survey is for employment to rise by 7.5k in January, between a range of estimates from -16.0k to +15.0k. A rise in the unemployment rate from 5.1% to 5.2% is the consensus call from economists (range: 5.1% to 5.3%), even with the participation rate expected to remain at 66.0% (range: 65.9% to 66.1%).  

What to watch | Labour Force Survey

Employment gains in November (38.5k) and December (28.9k) were much stronger than expected so the key question is whether the momentum continued into the new year. The last time where employment outperformed expectations for 3 straight months was between March and May 2019. Employment outcomes in January can often be volatile coinciding with the summer holiday period, while there is added potential for bushfires to have some impact on today's reading.