Australia's Labour Force Survey for November is due for release from the ABS at 11:30am (AEDT) today. Going into today's report, the national unemployment rate is on the lows for the cycle at levels not seen in almost 5o years after employment reaccelerated in October. There looks to be scope for that momentum to continue in November as labour demand remains very strong.
As it stands | Labour Force Survey
Employment increased by 32.2k in October, well above consensus (15k) and more than rebounding from a fall in September (-3.8k). The full-time segment added 47.1k to employment but was moderated by a 14.9k fall in part-time employment. Over the past year, employment has surged by 5.9% (762k) as the effects of the pandemic and the associated restrictions have eased.
The unemployment rate established a new low for the cycle falling from 3.5% to 3.4%, its lowest level overall since September 1974. The broader underemployment rate declined from 6.0% to 5.9%, reducing the total underutilisation rate in the labour force to 9.3%, a 41-year low. These outcomes came alongside the participation rate remaining just off record highs at 66.6%.
Hours worked increased by 2.3% in the month, its sharpest rise in 8 months following a significant reduction in Covid-related absences to their lowest level since December 2021. This drove hours worked to 7.4% above their pre-Covid level.
Market expectations | Labour Force Survey
The consensus expectation is for employment to rise by 17k in the month, though the range of estimates is once again wide, from zero to 45k. The latest reading from the ABS's high-frequency payrolls series is consistent with rising employment in November. No change is anticipated in the unemployment rate (3.4%) from October (range: 3.3% to 3.5%), with the participation rate also expected to remain steady (66.6%).
What to watch | Labour Force Survey
After employment surprised strongly to the upside in October, I see scope for a similar outcome in today's report. While vacancy data and job ads have come off their highs, they are still at very elevated levels that make the consensus estimate for employment look modest in comparison.
Employment is coming off a patchy Q3 where a slight decline was recorded (-4k). The national accounts last week showed that although GDP expanded by 0.6% in Q3, hours worked were largely flat (0.1%) pointing to the effects of seasonal factors and Covid-related disruptions.
Employment may therefore be playing catch up over Q4, with the October outcome potentially being the first sign of that. Leaving aside the lockdown-affected 2020 and 2021, employment in prior years has shown a fairly consistent pattern of strength over the final quarter, boosted in part by seasonal hiring. The difference this time is that spare capacity in the labour market is at historical lows, so the pace of hiring is likely to be slower. Nevertheless, there is reason to be optimistic on prospects for another upside surprise for employment.
