Preview: Labour Force Survey July

Australia's monthly update on the labour market for July is due to be released by the ABS today at 11:30am (AEST). Having come through the initial dislocation of April and May coinciding with the national shutdown, the labour market saw a partial rebound in June as the domestic economy started to reopen. The ABS weekly payrolls data suggests the rebound in hiring continued into July, though today's report will to a large extent be viewed by markets as out of date as it comes ahead of the reversal of Victoria's reopening after Melbourne was placed into a stage 4 shutdown and regional areas went to stage 3 restrictions in early August. 

As it stands | Labour Force Survey

Australia's labour market collapsed through April and May with 871.5k jobs lost (comprising -533.7k part-time and -337.8k full-time). In June, the reopening led to 210.8k of these jobs being restored to the economy around an uneven mix as 249.0k part-time jobs came back but full-time employment continued to fall (-38.1k). 

The nationwide shutdown resulted in hours worked falling by around 10.4% over April and March, though the reopening generated a solid rebound of 4.0%m/m in June. That still left hours worked down 8.5% over Q2 and the overall level 6.8% below its pre-pandemic level in March. 

With the reopening leading to more Australians returning to the labour force, the participation rate lifted off its 20-year low of 62.7% to 64.0%. This contributed to a 0.3ppt increase in the national unemployment rate to 7.4% — its highest level since November 1998. Both the underemployment rate and underutilisation rate remain extremely elevated, though they did at least move lower to 19.1% and 11.7% respectively helped by the 4% rise in hours worked in June.

See the full review of the June report here

   

Market expectations | Labour Force Survey

Further improvement is expected to have come through in the labour market in July with the median forecast situated at +30.0k on the employment number. However, there remains an extraordinarily high degree of uncertainty around the outcome with individual estimates ranging between -120.0k and +150.0k. The unemployment rate is expected to be driven up to 7.8% (range: 7.3% to 8.2%) on increased labour force participation. 

What to watch | Labour Force Survey

With the reopening on track through the early part of July, it will be of interest to assess the momentum in employment and hours worked following on from the rebound that started in the month prior. Another area worth following is the participation rate that is likely to rise further, in part reflecting the reintroduction of the mutual obligation requirements linked to the JobSeeker support payments from early June.