Australian employment rebounded in November (35.6k) to drive the national unemployment rate down to an 8-month low of 3.9%, defying an expected rise from 4.1% to 4.2%. Markets have priced out an RBA rate cut in February on the back of today's report. Employment continues to rise despite weak economic growth while wage and inflation pressures are slowing. The RBA continues to steer the narrow path.
By the numbers | November
- Employment posted a 35.6k net increase (full time +52.6k/part time -17.0k), above the 25k consensus forecast and up from a 12.1k lift in October (revised from 15.9k).
- National unemployment rate fell from 4.1% to 3.9%, its lowest level since March 2024, against an expected rise to 4.2%. Underemployment (6.2% to 6.1%) and underutilisation (10.3% to 10.0%) fell to lows since April and September 2023 respectively.
- Labour force participation came in at 67.0% from 67.1% in October, moving down from a record high level after September's figure was revised lower by 0.1ppt from 67.2%. The employment to population ratio increased from 64.3% to 64.4%.
- Hours worked saw their softest result since May coming in flat on the month (0.0%), easing annual growth to 2.1% from 2.2% (revised from 2.5%).
The details | November
Employment exceeded expectations rising by 35.6k in November after posting its softest result in 7 months (12.1k) last time out. The gain in the latest month was driven entirely by the full time segment (52.6k) as part time employment declined (-17.0k). Momentum in employment has slowed from its very strong pace during the September quarter; however, it is still solid averaging 35.9k for the 3 months to November.
Reflecting this, labour market conditions have tightening not loosening. Headline unemployment has declined from a recent high of 4.2% in July to print with a 3 handle (3.9%) for the first time since March. Although this is what stands out in today's report, the broader measures of underemployment and underutilisation have been declining over recent months. Underemployment is now 6.1%, its lowest since April 2023 and down a recent high of 6.7% just 6 months ago. Total labour force underutilisation has tightened to 10.0% - a low since September 2023 - from a high of 10.8% at the start of the year.
The supply side of the labour market has been highly responsive to demand, with labour force participation and the employment to population ratio rising to record highs during this cycle and then remaining around those levels. Partcipation is not quite as high as previously estimated, with the ABS revising the peak down from 67.2% to 67.1%. Wage pressures in the Australian labour market have been less severe than in some countries overseas, and as RBA Governor Bullock noted at Tuesday's press conference, the recent Q3 Wage Price Index had come in a bit softer than expected - a factor behind the Board's dovish pivot.
Hours worked in November flatlined following a run of month-on-month increases going back to May. Full time hours were up 0.2% for the month, offset by a 1.1% fall in part time hours. Total hours have lifted by 2.1% across the year, running slightly below the pace of employment growth at 2.4%.
In summary | November
The market reaction to today's report was sharp as the build-up in positioning for a February rate cut following Tuesday's RBA meeting was unwound. Overall, today's report suggests that the RBA continues to steer down the narrow path; employment continues to rise and inflation pressures are easing. The slowdown in economic growth in the Q3 GDP figures did appear to shift the Board's thinking to a more dovish outlook, but that will need to be weighed against the retightening in the labour market reported today.
