With the end of the Delta lockdowns in sight, today's Australian Labour Force Survey (due at 11:30am AEDT) is expected to show the recovery getting underway in October. Participation and employment are likely to have increased as preparations for reopening ramped up, while the rebound in hours worked should also continue after rising in September.
As it stands | Labour Force Survey
In September, Australian employment fell to its lowest level since the start of the year as the Delta lockdowns continued. Following on from August's 146.3k decline, employment was down by a further 138k in September (vs -110k expected). In this latest outturn, the weakness came entirely in the part-time segment (-164.7k), extending its fall from August (-78.2k). Full-time employment posted a 26.7k rise in September, partially rebounding from the month prior (-68k).
With large parts of the nation in lockdown, many workers had been stood down or were on reduced hours in recent months. For the period between May and August, hours worked had declined by 5.6%. September saw the early signs of recovery as hours worked lifted by 0.9%m/m, driven by rebounds in Queensland (5.4%) and New South Wales (2.7%).
The labour force participation rate was around record highs prior to the Delta lockdowns but had subsequently fallen to a 15-month low at 65.4% by September. This reflects the effects of the stay-at-home restrictions and the relaxation of income support requirements. In NSW, the fall had exceeded the depths seen at the outset of the pandemic, with participation in the state crunched to a 17-year low (61.8%).
Nationally, the fall in participation has been larger than the decline in employment; a configuration that has seen the unemployment rate moving lower over recent months, from 5.1% in May to 4.5% in August before ticking up to 4.6% in September. A more reliable guide to conditions has come from underutilisation and underemployment, which factor in the loss of hours worked and these measures have backed up sharply over the lockdown period as a result.
Market expectations | Labour Force Survey
The market expects the recovery to have gained traction in October, with the consensus for employment at 50.0k. However, the range of estimates around today's outcome is wide, sitting between -50k to 120k. Australia's unemployment rate is forecast to move up to 4.8% from 4.6% (range: 4.5% to 4.9%), driven by increasing participation. The extent to which upcoming reopenings were able to draw workers back to the labour force is the major uncertainty.
What to watch | Labour Force Survey
One point to highlight is that the ABS has advised that the reference period for today's survey shifts forward by a week relative to what would normally be the case, due to 2021 being a Census year. In this case, today's survey will be reflecting hiring done in preparation for the reopening, before the lockdowns had ended. Yesterday's high-frequency payrolls data suggests this will mainly be coming from NSW and the ACT, with Victoria's initial reopening not occurring until later in the month. The weakness in the other states is likely associated with school holidays. Overall, the change in hours worked and participation rate will be the key indicators of the state of labour market activity.
