Australian employment surpassed expectations for the 5th month on end in August rising by 47.5k against the 26k consensus. The national unemployment rate held at 4.2% with labour force participation remaining at record highs (67.1%). The continuation of resilient labour market conditions should see the RBA retain its place as a hawkish outlier to its G10 peers in actively pushing back against near-term rate cuts.
By the numbers | August
- Employment increased (on net) by 47.5k (full time -3.1k, part time 50.6k) in August, above the consensus forecast for 26k. However, downward revisions lowered employment by 14.9k over June and July.
- Australia's unemployment rate was unchanged at 4.2% (as expected), but the broader underemployment rate lifted from 6.3% to 6.5%. Labour force underutilisation remained at 10.6%, little changed over recent months.
- Labour force participation held at record highs printing at 67.1%.
- Hours worked were up 0.4% in the month - matching their gain in July - to be up by 1.7% over the year.
The details | August
Employment continued its run of strong gains rising by a further 47.5k in August to by up by a little more than 310k year to date. Notwithstanding a series of downward revisions to prior months, this is still a considerable increase amid the slowdown in economic growth. Additionally, more than 3/4 of the increase in employment in 2024 has been driven by full time employment, putting the modest decline in August (-3.1k) in context. Part time employment (50.6k) saw its strongest rise in 12 months to drive the headline outcome in August. To highlight the strength of the momentum in the labour market, employment gains averaged 47.7k for the 3 months to August - its fastest since May last year, an annualised pace of more than 4%.
With the participation rate remaining steady at record highs (67.1%), August's rise in employment was strong enough to hold the unemployment rate at 4.2%. The unemployment rate is up from cycle lows of 3.5% but remains at low levels - as does underemployment (6.5%) and total underutilisation (10.6%).
A 0.4% rise in hours worked came through in August, its 3rd consecutive monthly rise. Despite the decline in full time employment, hours worked by that segment still advanced by 0.2%. Meanwhile, part time hours were up 1.6% - its strongest rise since November 2022 - outpacing the lift in employment (1.1%). Base effects saw annual growth in hours worked accelerate from 0.5% to 1.7%. A considerable divergence remains in place between annual growth in hours worked in the full time (1.0%) and part time segments (5.0%) - a sign of adjustment in the labour market to weaker demand conditions.
In summary | August
The August report was consistent with the continuation of robust labour market conditions, remaining resilient to slower economic growth. As highlighted in a recent speech by RBA Assistant Governor Hunter, labour market conditions are assessed as tight relative to full employment. There is nothing in today's report to change that view, meaning the RBA's focus will likely remain on the inflation side of its mandate, pushing back on the prospect of a rate cut into year-end.