Australia's December labour force survey is due to be published at 11:30am (AEDT) today. Labour market conditions rebounded very strongly as the Delta lockdowns ended, with employment and hours worked surging back above pre-pandemic levels. A recovery in participation and unemployment were indicators of a tightening labour market as job vacancies remained at very elevated levels.
As it stands | Labour Force Survey
November saw a record month of employment as a 366.1k rebound was posted on reopening from the Delta lockdowns, coming in well above the consensus forecast for a 200k rise. This more than recovered the job losses sustained over the course of the lockdowns (-359.5k) and saw employment rising back above its pre-pandemic level for the first time since August. Employment in the part-time segment lifted by 237.8k in the month after having fallen by 251k over June-October and full-time work, which was down by 108.5k over the same period, rebounded by 128.3k.
Eased restrictions and the reopening of the retail sector and hospitality and entertainment venues drove a 4.5% surge in national hours worked in the month. The sharpest increases were seen in the states coming out of lockdown: New South Wales 5.6%, Victoria 9.7% and the ACT 10%. As a result, total hours worked across the Australian economy rebounded back above pre-pandemic levels.
Overall, reopening effects were reflected in a tighter labour market. The participation rate rebounded by 1.4ppts to 66.1% and returned to its pre-Delta level. This occured alongside a fall in unemployment from 5.2% to 4.6%, while broader measures of spare capacity also declined: underemployment from 9.5% to 7.5% and underutilisation from 14.7% to 12.1%.
Market expectations | Labour Force Survey
Further strength in the labour market is expected following November's reopening rebound. December employment is expected to rise by 60k on the median estimate. National unemployment is anticipated to ease by 0.1ppt to 4.5%, which is expected to be accompanied by a lift in participation to 66.2%.
What to watch | Labour Force Survey
With wage and inflation dynamics key to the RBA's reaction function, the focus in today's report will be the extent of any further tightening achieved in the labour market. Demand for labour is very robust, with the ABS last week reporting that there were nearly 400k job vacancies across the nation in November, while on the supply side the participation rate is just off record highs. While Omicron could disrupt the momentum, the underlying fundamentals appear very strong. Next week's Q4 CPI report will provide an update on inflation dynamics in the Australian economy.
