Preview: Labour Force Survey, November

At 11:30am (AEDT) today, the ABS is due to publish its Labour Force Survey for the month of November. Going into the report, the background is constructive after Australia's labour market recovery regained significant momentum in October as employment surged up by 178.8k, with a strong outcome coming through in Victoria (81.6k) as the state positioned for reopening. However, this was not enough to prevent the unemployment rate from backing up slightly to 7.0%, which reiterated that there is still a long road to recovery ahead.

As it stands | Labour Force Survey

In October, employment (on net) rebounded very strongly with a 178.8k increase to defy market expectations for a 27.5k fall. This came after a weak report in the month prior where employment contracted by 42.5k that mainly reflected the impact of Victoria's shutdown. But this then gave way to preparations for the reopening as employment in the state increased by 81.6k to drive the headline rise at the national level. Employment in all other mainland states also posted increases in the month.

A notable aspect of October's gain was that it was driven by full-time employment, which lifted by 97.0k compared to an 81.8k increase from the part-time segment. This was the first month since the recovery commenced in June where the outcome for full-time employment has outperformed the part-time category. The key question is whether this is an early sign of the recovery broadening out as employment and hours worked in the part-time segment have largely been restored to their pre-pandemic levels, albeit with considerable compositional shifts occurring across industries.

With the participation rate rising sharply to 65.8% from 64.9% — driven mainly by a 2.0ppt increase in Victoria (65.0%) ahead of the reopening — the national unemployment rate lifted from 6.9% to 7.0%, though markets had expected a large increase to 7.2%. Spare capacity more broadly declined but was still elevated — underemployment falling 1.0ppt to 10.4% and underutilisation down 0.9ppt to 17.4% — as hours worked in the month of October advanced by 1.2% (-3.4%Y/Y). For a full review of October's report see here.

Market Expectations | Labour Force Survey

The consensus estimate for today's report is for employment to rise by a further 40k in November. As has been the case during this pandemic period, the range of estimates is again very wide between -10k and +100k. The national unemployment rate is anticipated to hold steady at 7.0%, though again the range of forecasts covers a lot of ground sitting between 6.5% on the low side and 7.3% on the high side.

What to watch | Labour Force Survey

The compositional detail on the employment number is where our focus is for today's release. Can we see a repeat of last month's outcome where full-time employment outpaces part-time work? If that were to be the case, it would add weight to the view that the recovery could be starting to broaden out where full-time work takes up more of the running with the economy now opening up more widely. Certainly, returning full-time employment back to its pre-pandemic level is likely to be a great deal harder than it has been for part-time work. But momentum is important in how that plays out so looking for signs where this may be starting to build is key.