Australia's Labour Force Survey for September is scheduled for release at 11:30am (AEDT) today. A strong rebound in employment in August (64.6k) held the unemployment rate to 3.7%, remaining near cycle lows. In today's report, employment is expected to moderate to a 20k increase, though I anticipate a stronger outcome in the 30-40k range.
Labour market activity rebounded in August...
Coming off a weak month in July - the unemployment rate lifted from 3.4% to 3.7% as employment fell by 1.4k - the labour market regained momentum in August. Employment rebounded by 64.9k in the month, well above the 25k consensus forecast. Much of the increase came from part-time employment (62.1k) with the full-time segment rising marginally (2.8k).
... and the participation rate reached a new record high
Alongside the strength in employment, the participation rate increased from 66.9% to 67% - a record high. This held the unemployment rate at 3.7%; however, underemployment lifted from 6.4% to 6.4%, which left the total underutilisation rate 0.1ppt higher at 10.2%.
Total hours worked were reported to have declined 0.5% month-on-month, seemingly against the broader strength in the report. This followed a surprise outcome in August where hours worked lifted 0.2%m/m despite employment falling. Overall, hours worked over the year to August were 3.7% higher, and 10.1% above their pre-Covid level.
Conditions are expected to have moderated in September...
Employment is forecast to moderate to a 20k rise in September on the consensus estimate (range: 5k to 45k). The ABS's payrolls index was broadly flat (0.2%) over the month to the September reporting period (9/9), indicating a continuation of the momentum from August could lead to an upside result for employment. The unemployment rate is expected to remain unchanged at 3.7%.
... but ongoing resilience in employment can continue
The RBA has left rates unchanged since June (4.1%), with the Board awaiting the effects of its earlier rate hikes to flow through. As tighter monetary policy gains increased traction, the RBA forecasts growth to slow leading to slower employment growth that sees the unemployment rate rising to 4.5% by mid-2025. For the time being, employment growth remains solid, with the 3-month average increase running a little above 30k over recent months. I have been of the view that this is a sustainable pace for employment growth going forward, with leading indications of labour demand remaining at elevated levels. This demand is partly being supported by the rapid pace of post-pandemic population growth.
