Australia's Labour Force Survey for October is due to come across the screens at 11:30am (AEDT) today. Strong labour market conditions continue to defy Australia's growth slowdown, a key factor in markets pricing out RBA rate cuts until the second half of next year. Another solid report is expected today, building on the strong run of monthly employment gains that started in the Autumn. While the RBA assesses that the labour market remains tight relative to full employment, the slowing in the Wage Price Index to 3.5% in Q3 reported yesterday indicated that inflationary pressures stemming from the labour market are cooling.
October preview: Momentum with another above-consensus employment outcome
Markets go into today's report expecting once again to see employment moderate; the median forecast is at 25k, with estimates ranging from 10k to 40k. The past 6 reports stretching back to April have all seen employment surprise topside of consensus, which has been in the 20-25k range. Given this run of form and the current momentum of employment - the 3-month average to September was 51.9k - another above-consensus outcome appears a strong chance.
The unemployment rate is expected to remain at 4.1% (range: 4.0% to 4.2%), based on an unchanged participation rate (67.2%). However, with participation at record highs, the risk of an uptick in the unemployment rate remains prevalent if employment loses momentum.
September recap: Employment rises at 7-month high
Employment surged to a 64.1k rise in September, its strongest increase since February and the 6th consecutive outcome that came in above expectations. Full-time employment (51.6k) led the way, with support from the part-time segment (12.5k). In addition to the gains in July (43.7k) and August (46.6k), employment lifted by 155.6k (or 1.1%) across the quarter, its best quarterly outturn since Q1 last year.
Underlining the strength of employment, the national unemployment rate stayed at 4.1% in September as labour force participation lifted to a new record high of 67.2%. Furthermore, the employment to population ratio - the share of Australians in work - rose to match its earlier peak of 64.4%, a materially higher level than in the pre-pandemic labour market.
Overall, conditions in the labour market have tightened modestly in recent months; underemployment declined from 6.5% to 6.3% in September, averaging 6.4% in the quarter (down from 6.6% in Q2), while underutilisation fell from 10.6% to 10.4%, down from an average of 10.6% in Q2 to 10.5% in Q3.
Hours worked advanced for the 4th month in succession posting a 0.3% increase in September. Annual growth lifted from 1.7% to 2.4%, a 12-month high. Growth in part time hours (4.5%) strongly outpaced the full-time segment (1.9%) over the past year, reflecting faster growth in part time employment (4.2%) relative to full time (2.6%).
