As it stands | Labour Force Survey
In January, employment (on net) lifted by 13.5k—slightly outperforming consensus (+10.0k) for the third month in succession. Employment in the full-time segment advanced by 46.2k while part-time employment declined by 32.7k. However, with participation in the workforce picking up from 66.0% to 66.1%, the unemployment rate increased by more than expected rising from 5.1% to 5.3%, whereas the median forecast was for a more gradual lift to 5.2%. Meanwhile, the underutilisation rate jumped from 13.4% to 13.9% and the underemployment rate increased from 8.3% to 8.6%, with both measures reaching their highest since June 2018. Confirming the soft nature of the update, hours worked contracted by 0.4% in the month, which saw annual growth decelerate from 2.2% to 0.9% to a 2-year low.
For a full review of January's report see here
The consensus estimate is for employment to post a gain of 8.5k in February between a range of individual forecasts from -10.0k to +20.0k. On the expectation that participation remains unchanged at 66.1%, the unemployment rate is anticipated to hold at 5.3% (range: 5.2% to 5.4%).
Markets will be laser-focused on the unemployment rate from this point onwards as a key gauge of the impact of the coronavirus outbreak on firms and the broader economy. According to the recent NAB Business Survey, around 50% of responding firms were yet to notice an impact from the coronavirus with employment expectations expecting to average around 17k per month over the next 6 months. After rising from 5.1% to 5.3% in January, another upside surprise on the unemployment rate in February would suggest that labour market conditions were already beginning to deteriorate ahead of what will likely be a period of material weakness through the June quarter.
