Australia's first labour force survey for 2021 comes up later this morning, with data for the month of January due from the ABS at 11:30am (AEDT). The recovery in the nation's labour market in the wake of the pandemic has been stronger than expected, though it remains incomplete and the crisis has also brought about a shift in its compositional dynamics with full-time employment now making up a much lower share of the labour force. At the end of 2020, levels of spare capacity had declined significantly from their peaks around the middle of the year but the unemployment rate at 6.6% was still elevated highlighting the importance of sustaining robust employment over the year ahead.
As it stands | Labour Force SurveyEmployment matched consensus in lifting by a net 50.0k in December, adding to the gains from October (180.4k) and November (90.0k). While momentum in employment was strong over the second half of the year rising by 557.5k as the economy reopened and activity resumed, the job losses sustained through the peak of the crisis in Q2 (-645.1k) had not yet been fully restored.
Furthermore, the composition of the labour market was significantly different compared to before the pandemic. Part-time employment had collapsed in response to the shutdown and social distancing restrictions but over the reopening period, these losses had been more than fully reversed, rising by a further 14.9k in December to around 4.15 million to be 0.6% above its pre-pandemic level. However, full-time employment was still 1.3% down on its level before the crisis, though momentum in this segment had lifted sharply over Q4 (218.7k) and was driving the overall recovery. With the disruptions from restrictions easing and economic activity moving through its gears, total hours worked advanced by 3.2% over Q4, though its level was still 1.4% lower than pre-pandemic and 1.5% down through the year.
Reflecting the rise in hours worked and employment, spare capacity is being gradually eroded while participation in the labour force has risen above pre-pandemic levels as restrictions have eased and conditions on receiving income support payments have tightened. The national unemployment rate declined from 6.8% to 6.6%—well down from July's peak at 7.5%—while rates of underutilisation also lowered further in December. Meanwhile, just 7 months after collapsing to its lowest levels in around two decades, the participation rate lifted to a record high in December (66.16%). For a full review of December's report see here
Market Expectations | Labour Force Survey
The median estimate on the employment number in January is for a rise of 30.0k between a range of forecasts from 10.0k to 67.5k. This outcome is expected to result in the unemployment rate ticking down from 6.6% to 6.5%, on the basis that participation holds steady at its level from December.
The median estimate on the employment number in January is for a rise of 30.0k between a range of forecasts from 10.0k to 67.5k. This outcome is expected to result in the unemployment rate ticking down from 6.6% to 6.5%, on the basis that participation holds steady at its level from December.
What to watch | Labour Force Survey
Headline employment shapes as the key number with the participation rate sitting at a record high and spare capacity elevated. Momentum in employment growth was strong towards the end of last year, with the recovery broadening out more widely to the full-time segment after part-time employment had already been restored to pre-pandemic levels.