Australia's December labour force survey is due for release by the ABS at 11:30am (AEDT) today. The momentum of the recovery in the labour market from the pandemic crisis was gathering pace towards the end of the year with Victoria reopening more widely and the effects of the earlier disruptions across the rest of the nation fading. By November, the unemployment rate had lowered to 6.8% from its peak of 7.5% in July, while rates of underutilisation were also coming down sharply with employment and hours worked on the rise.
As it stands | Labour Force SurveyEmployment (on net) came in much stronger than expected in November rising by 90.0k against the consensus estimate for a lift of 40.0k. This followed on from the 180.4k surge in October that defied expectations for a drift lower of -27.5k. Over these past two months, the key factor has been the reopening in Victoria from its second shutdown with employment in the state rising by around 156k. Solid increases in New South Wales (61k) and Western Australia (27k) over the period also added to the momentum.
The composition of the strong gain in employment over October and November is also worth highlighting. In the 3-month period to August when the economy was reopening from the national shutdown and restrictions were being wound back, employment rebounded by 508k with the part-time segment (458k) accounting for most of the increase. Victoria's statewide shutdown then stalled the recovery in September, but over October and November the nature of the recovery was broadening out with full-time employment (183k) contributing the bulk of the increase in total employment (270k). The effect of rising employment was evident in a sharp lift in hours worked in November (2.5%) building on the 1.2% lift in the month prior.
The other notable aspect is that following a 0.3ppt lift to 66.1%, the nation's participation rate now matches its pre-pandemic record high; this after collapsing to a 21-year low of 62.6% as of May. Even as this has occurred, inroads have been made into spare capacity with the unemployment rate declining 0.2ppt to 6.8% in November, while underemployment fell 1ppt to 9.4% and underutilisation lowered to 16.2% from 17.4%.
Market Expectations | Labour Force Survey
The market looks for further improvement in the labour market towards the end of the year with its median estimate for the employment number sitting at 50.0k. This would be a slowdown on the past couple of months but still a respectable outcome if it eventuates. Meanwhile, the headline unemployment rate is forecast to ease 0.1ppt to 6.7%.
The market looks for further improvement in the labour market towards the end of the year with its median estimate for the employment number sitting at 50.0k. This would be a slowdown on the past couple of months but still a respectable outcome if it eventuates. Meanwhile, the headline unemployment rate is forecast to ease 0.1ppt to 6.7%.
What to watch | Labour Force Survey
Over recent months we have been closely watching full-time employment for signs of a broadening out in the labour market recovery so that remains in focus. Something to keep in mind is that part-time employment is often strong in December reflecting seasonal hiring, though whether this holds up during pandemic times is anyone's guess. Meanwhile, the change in hours worked over the quarter should give should us a rough guide to GDP growth prospects in Q4. The participation rate will also be of interest after matching its record high in November.
