Australia's Labour Force Survey for November is due today at 11:30am (AEDT), the last major domestic data point left on the calendar for the year. After sharply outperforming expectations in October, employment is anticipated to moderate in November (11.5k), with the unemployment rate seen ticking up to 3.8%.
A recap: Employment lifted strongly in October, but the unemployment rate increased
Employment lifted by 55k in October, surprising strongly on the upside of expectations (24k). Full time employment saw a 17k rise; however, employment continued to be driven by the part-time segment (37.9k), potentially boosted by temporary hiring for the Voice Referendum.
While employment increased strongly, it was outpaced by a rise in the participation rate, which increased from 66.8% to 67% to be back at record highs. As a result, the unemployment rate increased from 3.6% to 3.7%, returning to its level from July and August. With the underemployment rate remaining unchanged (6.3%), the uptick in unemployment saw the combined underutilisation rate rising from 9.9% to 10%.
Hours worked saw their strongest rise in 6 months lifting by 0.5% in October. However, this was after a weak Q3, with the estimates across the various ABS measures suggesting hours worked declined in the order of 0.6-0.8% in the quarter. The recent weakness in hours worked is the clearest sign of an adjustment in the labour market to the slowdown in the economy.
Employment is expected to moderate in November...
Markets forecast a modest rise in employment of just 11.5k in November, with the band of estimates ranging between -30k to 30k. The moderation expected reflects the recent volatility in monthly employment outcomes. It also seems to be based on the view that the Voice Referendum boosted the October figure. The ABS's payrolls series fell slightly (-0.2%) for the month to mid-November, weighed by a sizeable decline in the index for public administration and safety industry (-6.7%) post the Referendum. Expectations are for the unemployment rate to lift from 3.7% to 3.8% (range: 3.6-3.9%).
... with hours worked remaining in focus
Given the recent volatility in employment outcomes is expected to continue, the hours worked figure should provide the cleanest read on conditions. Markets sense that the recent weakness in hours worked reflects a loosening in the labour market. But after a rebound was seen in October, the question is whether another rise can come through in November.