Australia's latest monthly update on the labour market for October is due to be published by the ABS at 11:30am (AEDT) this morning. Progress in the national labour market recovery was set back by the impact of the shutdown in Victoria as employment declined by 29.5k in September and the unemployment rate increased to 6.9%, and more weakness is expected to be reported in today's release.
As it stands | Labour Force SurveyIn September, employment (on net) fell by 29.5k, though this was smaller than the 40.0k declined that markets had expected. In Victoria, a further 35.5k jobs were lost as the shutdown in the state continued following on from the loss of 37.7k jobs in August. The outcomes across the other states were generally muted, but Queensland outperformed as employment there lifted by 32.2k. Overall, September's outcome constituted a loss of momentum in the recovery in employment. From its earlier trough of 6.7% below its pre-pandemic level, the decline in total employment had been pared back to a 3.0% fall by August, but September's outcome unwound some of this progress to a 3.3% decline.
Australia's unemployment rate lifted to 6.9% from 6.8%, though a larger increase to 7.0% was expected last month. The lift in unemployment was accompanied by an easing in the participation rate from 64.9% to 64.8%. Given the weakness in employment and the disruption in Victoria from the shutdown, total hours worked surprised somewhat in firming by 0.5% in the month, but the level is still some 5.1% weaker than its pre-pandemic baseline. For a full review of September's report see here.
Market Expectations | Labour Force Survey
The consensus expectation is that the labour market recovery will have lost further momentum in October as Victoria remained in shutdown. Employment is forecast to fall by 27.5k on the median estimate between a wide range of forecasts from -60.0k to +30.0k. This follows recent weakness in the high-frequency ABS payrolls data (chart below), though this series has not always been the most accurate guide to the labour force survey. The national unemployment rate is expected to deteriorate from 6.9% to 7.1%, but again there is a large spread in the range of estimates (6.7% to 7.4%).
What to watch | Labour Force Survey
After the fall in September, the headline employment will be closely watched. Consecutive monthly declines would raise some concern that the recovery in employment was stalling and that the loss of momentum is more broadly based than just in Victoria as the payrolls data have been suggesting. Another factor to consider that could have implications for today's report is that in late September the Federal Government's JobKeeper (wage subsidy) policy was tapered and eligibility for the scheme was tightened, and this could have potentially prompted some further adjustments in the labour market. With a lot going on beneath the surface, it remains important to follow the hours worked measure.