Preview: Labour Force Survey — December

Australia's Labour Force Survey for December is due today (1130 AEDT). This is one of two key data points - the other being next week's Q4 CPI report - ahead of the RBA's first meeting for 2026 on February 2-3. Markets are pricing in around 50bps of tightening this year, though a hike isn't expected until May.  

December preview: Rebound expected 

Expectations are somewhat more elevated going into today's report after employment contracted by its most since February 2025 in October (-21.3k). Employment is forecast to rise by 26.5k (9-month high), with estimates ranging from 18-45k. As the chart below shows, outcomes for employment (green line) have been highly volatile throughout 2025, so forecasts are generally held with relatively little conviction.    

The unemployment rate in December is expected to tick up to 4.4% (range: 4.3-4.5%) from 4.3% in the prior two months. Much will depend on the participation rate as to where the unemployment rate comes in. A rise in the unemployment rate is expected partly because participation will be anticipated to rebound after falling to an 8-month low in November. 

November recap: Employment slides but unemployment holds at 4.3%  

Employment unexpectedly fell by 21.3k in November against an anticipated rise of 20k, its weakest result in 9 months. This was driven by the largest decline in full-time employment since December 2023 (-56.5k), though that was moderated by a gain in part-time employment (35.2k). 

 

Despite employment falling, the national unemployment rate remained steady at 4.3%. That was due to the participation rate declining from 66.9% to 66.7%, which equated to an estimated reduction to the labour force of 23.4k, broadly in line with the fall in employment. However, the broader underemployment rate increased from 5.8% to 6.2% on a flat month for hours worked. That saw total labour force underutilisation lift 0.4ppt to 10.5%, a rise consistent with the weak employment figure and an overall loosening of conditions in November.  

As highlighted, hours worked stalled in November (0%) to ease from a modest rise in October (0.4%). That slowed the annual run-rate in hours worked from 2.1% to 1.2%. Over the past year, hours worked in the part-time segment at 4.5% have significantly outpaced the growth seen in the full-time segment (0.6%).    

Macro (Re)view (16/1) | Mind the noise

A range of crosscurrents from geopolitical risks, policy uncertainty and fears over Fed independence continued a noisy start to the year. US bank earnings were mixed but the key driver of sector weakness was proposed caps on credit card interest rates, while ongoing valuation concerns weighed on US equity markets. In the FX space, likely snap elections in Japan are driving a weaker Yen on the view that an increased majority for the governing LDP could lead to more supportive fiscal and monetary settings. At around 158 USDJPY is pressing highs since 2024, fueling speculation over possible currency intervention.  

Expectations for two Fed rate cuts remained intact this week, priced for June and September. Fears of renewed inflationary pressures were allayed as US CPI remained steady in November, matching consensus at 2.7%yr on a headline basis while core inflation held at 2.6%yr against an expected lift to 2.7%. Those rates were slightly below producer price inflation that rose to 3%yr in headline and core terms, above the 2.7% consensus for both measures. 

Putting all this together, estimates are for the core PCE deflator - the gauge the Fed sets policy to - to be in the order of 3%yr, which is still elevated to the 2% target but expected by the Fed to decline as the year progresses. The clear risk to that view is if firms look to pass through more of the tariff-driven increases to their input costs to the consumer, but so far firms are using profit margins to absorb a good degree of those higher prices. On the consumer, November retail sales that aligned with Black Friday were solid rising by an above-consensus 0.6% month-on-month while the control group lifted 0.4% month-on-month.    

Money markets in the UK continue to price a further two cuts from the Bank of England this year. Positions in UK assets come up against event risk next week with the December inflation report due. Despite a soft start to the year, Sterling is up around 1.6% against the USD as markets removed the risk premium built in during the run up to the Autumn budget. Strong inflation data could see that momentum continue if BoE easing bets are pared back. Meanwhile, pricing has been unchanged so far in 2026 for the ECB to remain on hold through the year.  

Pessimism around the economic outlook and finances in the year ahead may pose risks to the acceleration in spending by Australian household seen in late 2025 continuing. Black Friday sales and major events drove household spending to a 1% month-on-month rise in November (see here), adding to the 1.4% surge in October - its fastest gain since early 2024. Strong momentum in discretionary spending has been the key, a sign that lower inflation and RBA rate cuts help to free up households to spend at the sales and as the major sporting events (NRL and AFL finals and Spring racing carnival) and concerts came around. 

Since then, the RBA at its December meeting indicated further cuts were unlikely with upside risks to inflation increasing. Although markets price potential RBA tightening as a story for the second half of the year, households may be wary. Consumer sentiment declined by 1.7% in January according to the Westpac-Melbourne Institute Index as views around the outlook for household finances (-4.5%) and economic conditions (-6.5%) deteriorated. That said, the index has fallen in four of the past five months, with spending still accelerating through October-November. December's labour force report is due next week where a slight uptick in the unemployment rate to 4.4% is expected. Job vacancies this week were consistent with a steady labour market as vacancy levels were broadly flat over the reporting period to November (-0.2%).

Australian household spending rises 1% in November

Black Friday sales and a busy calendar of sporting events and concerts saw Australian household spending rise 1% month-on-month in November. This comfortably outpaced expectations (0.6%) and followed October's 1.4% acceleration - the fastest increase since the start of 2024. Household spending has risen for 14 months on end and annual growth has worked its way up to its fastest pace in more than 2 years at 6.3%. Market pricing attaches a low probability to the RBA raising rates upon its return in February, with last week's November CPI report indicating that upside risks to the RBA's inflation outlook were well contained in the final quarter of 2025.   

Gains of 1.4% in October and now 1% in November show there was an acceleration in household spending towards year-end - though December could see a slowing. Discretionary categories have led the way with gains of 1.7% in the prior month and then 1.2% in November. The widening footprint of Black Friday where retailers are starting discounting periods earlier and major events have been key drivers. Meanwhile, the three RBA rate cuts in 2025 and higher real income growth are probably also at play. Annual growth in discretionary spending is now tracking at a 2½-year high at 6.1%.  

In November, sporting events including the Spring racing carnival and many high-profile concerts supported services spending (1.2%) while goods spending (0.9%) rose on Black Friday. These outturns saw annual growth in service spending rise from 6.5% to 7.8% - its fastest pace in almost 2 years - though goods spending was little changed at 4.9%.    

Spending in November rose in all except for one of the nine categories tracked by the ABS, with alcoholic beverages and tobacco falling by 1.8%. Gains in the other eight categories were led by a 2.2% increase in furnishings and household equipment and by a 2% lift in clothing and footwear, both benefitting from Black Friday. 

Recreation and culture rose by 1.7% to be up by 8.6% over the year - its fastest annual pace in 2½ years. The Spring racing carnival in Melbourne and a number of major concert tours during November were key contributors. This generated associated spending at hotels, restaurants and cafes (1.2%) and transport (1%).   

Australia's trade surplus $2.9bn in November

Australia's trade surplus narrowed to $2.9bn in November from $4.4bn in October, defying expectations to widen to $5bn. Export revenue declined for the first time since August with a 2.9% fall as iron ore saw its weakest month in 4 years (-9.1%). Import spending held broadly flat in the month (0.2%) at record highs.  

November's trade surplus was $2.9bn - its narrowest since August - after outcomes of $4.4bn in October and $3.4bn in September. In the 11 months to November, the trade surplus has averaged $3.9bn, which compares to averages of $5.6bn in 2024, $10.4bn in 2023 and the highwater mark of $13.5bn in 2022. The chart below shows the key dynamic behind narrowing trade surpluses over the past few years has been declining export revenue as import spending has grinded higher.

Exports declined by 2.9% in November ($44.6bn) on the back of falls in non-rural goods (-4.5%) and non-monetary gold (-7.8%). Weakness in non-rural goods mainly reflected a 9.1% decline in metal ores and minerals (iron ore), its largest fall in 4 years. ABS data indicated this was largely driven by weakness in export quantities, though prices were also soft. Non-monetary gold weakened in November (-7.8%) but remained near record highs.   

Import spending edged slightly higher (0.2%) to a new record high at $41.6bn, the level up 12.8% since November 2024. While there were declines in consumption goods (-1.9%) and capital goods (-2.8%) that was offset by a 5.3% rise in intermediate goods. Industrial supplies were the key driver behind the lift in intermediate goods, with rises in processed (14.8%) and primary supplies (117%). 

 

Australian dwelling approvals surge 15.2% in November

Australian dwelling approvals posted their fastest rise in 2½ years surging by 15.2% in November. The key driver was the volatile higher-density segment that saw a 36.3% increase in approvals in the month, while house approvals were up by a modest 0.7%. These outcomes elevated total approvals to their highest since February 2022 coming in at 18.4k in November. RBA rate cuts - 75bps in total in 2025 - rising housing prices and a tight overall supply-demand balance have all likely helped lift approvals, but levels still remain below those seen in past cycles.      

Monthly dwelling approvals rose 15.2% in November to 18.4k. This continues a volatile profile over recent months, often swinging from large gains to declines. The November result follows a 6.1% fall in October, an 11.4% rise in September and declines of 3.7% in August and 10.3% in July. Overall, approvals have averaged out at 17.1k over the 3 months to November - a highwater mark on that basis going back to late 2021. The chart below shows the higher-density segment has driven the recent momentum in approvals. 

 

The high-rise segment in particular looks to be the main driver of the upturn in higher-density approvals. That strength has been evident across a number of capital cities including Sydney, Melbourne and Brisbane. 

Australian CPI 3.4% in November

An improved Australian inflation report in November saw both annual headline and core CPI ease after rising in the prior month. Headline CPI slowed from 3.8% to 3.4%, printing below the 3.6% consensus figure, while trimmed mean or core CPI softened from 3.3% to 3.2%, as expected. Black Friday sales and holiday travel were key contributors to the softer inflation outcomes. The upside risks the RBA has been wary of in the final quarter of 2025 in light of its year-end forecasts for headline CPI of 3.3% and 3.2% for the trimmed mean do not appear to be materialising. The RBA's next rates decision is set for February 3, a meeting at which markets see the odds of a rate hike as unlikely at around a 1 in 3 chance. 

Source: ABS 

For the second month in succession, the monthly change in headline CPI was 0%. In October, base effects lifted the annual rate from 3.6% to 3.8% (headline CPI was -0.2% in October 2024), but in November they drove a decline from 3.8% to 3.4%, after the 0.4% rise from 12 months earlier fell out of the calculation. This highlights the volatility in the monthly indicator and how judgments can swing. The RBA has therefore said its focus remains on the quarterly figures that are due later this month. The more stable trimmed mean came in at 0.3% month-on-month, also the same as in October to leave the annual pace running a little above the top of the 2-3% target band. 

The key insights in today's report were around the effect of the Black Friday sales. Compared to 2024, clothing garments saw a larger discounting effect in 2025 with prices falling by 2.3% in the month (vs 1% in 2024). This was also the case for footwear and furniture, those items down 5.5% and 4.6% respectively in November 2025 to outpace the falls seen in 2024. Accessories were the outlier with prices down by a smaller amount in the 2025 sales (-4.1%) compared to 2024 (-7%). 

The other main driver weighing on headline inflation in November was holiday travel. That came after strong demand during September and October associated with the AFL and NRL finals and school holidays. 

Source: ABS 

Macro (Re)view (19/12) | Central bank divergence in focus

Markets navigated a week heavy with event risk with relative calm. US and European equities lifted but Asia underpeformed. The USD found support despite soft data reaffirming expectations for further Fed rate cuts. An easing Fed sets up central bank divergence as one of the key themes as markets look ahead to 2026. This week, the Bank of England cut by 25bps but the Bank of Japan hiked by 25bps. The ECB held steady as it continued to indicate rates had floored for the cycle, and the Riksbank and Norges Bank were also unchanged. Domestically, speculation is starting to increase around the RBA hiking as early as the February meeting. 

US data slowly coming back online is supporting dovish pricing for two Fed rate cuts next year, with the labour market weakening and inflation slowing. Headline CPI eased from 3% to 2.7%yr, defying the 3.1% consensus while the core rate came in from 3% to 2.6%yr against expectations for no change. Cooling inflation reaffirms the Fed's focus on the employment side of its dual mandate, which showed renewed signs of weakness.    

November payrolls rose by 64k but only after estimates reported a 105k fall in October. There were also 33k of downward revisions to payrolls in August (-26k) and September (108k). Given the Fed's view that the data are overstating payrolls by some 60k per month, all indications are that employment has been weakening into year-end. 

The unemployment rate rose to 4.6% in November from 4.4% in September (no figure was posted for October), while the underemployment rate jumped from 8% to 8.7% - both measures touching highs back to 2021. That came as participation picked up to 62.5% and the prime age rate held at 83.7% - just 0.2ppt off cycle highs. 

A widely expected hold from the ECB and upgrades to the growth and inflation outlook reaffirmed the pre-meeting view in markets that the easing cycle has likely run its course. The key depo rate was left at 2%, unchanged since June after 8 cuts from mid-2024 halved it from a peak of 4%. Swaps pricing has rates remaining on hold well into next year, the most likely scenario according to a Reuters article quoting ECB sources - though further easing has not been ruled out amid an uncertain economic outlook. 

At the post-meeting press conference, ECB President Lagarde continued to describe policy settings as being 'in a good place', reflective of new forecasts that showed inflation is on track to stabilise around its 2% target. While the ECB lifted its inflation forecasts for 2026 to 1.9% in headline terms (from 1.7%) and 2.2% on an underlying basis (from 1.9%), it expects inflation to ease back in 2027 to 1.8% headline (from 1.9%) and 1.9% core (from 1.8%).

The uplift to the inflation outlook comes as the euro area economy has remained resilient to trade and geopolitical headlines, underpinned by services-led growth. Accordingly, the ECB also revamped the expected growth profile to 1.4% this year (from 1.2%), 1.2% in 2026 (from 1%) and 1.4% in 2027 (from 1.3%). President Lagarde also highlighted the effect of the labour market in supporting the economy, with the unemployment rate sitting near record lows.

In the UK, the BoE lowered rates by 25bps to 3.75%. The decision was clinched on a narrow 5-4 majority by the Monetary Policy Committee, after Governor Bailey switched his vote to support a cut. This was the 6th cut in the current easing cycle dating back to August last year. The statement maintained the guidance that rates were 'likely to continue on a gradual downward path' - though it went on to note in a new inclusion that 'judgements around further policy easing will become a closer call'. 

In his policy comments in the meeting minutes, Governor Bailey said there was 'scope' to cut further but there was now 'more limited space' to do so with rates closer to neutral. The overall tone of the meeting saw markets wind back pricing for further easing to around 1-2 rate cuts by May next year. Earlier in the week, 2-3 rate cuts were seen as likely after inflation data in November showed encouraging progress - headline CPI fell from 3.5% to 3.2%yr and core CPI slowed from 3.4% to 3.2%yr - while there were more signs of weakness in the labour market as employment continued to slide (-38k in November).

The Australian government released the mid-year update of its 2026/26 budget. MYEFO reported a slight reduction in forecast cumulative deficits to $143.2bn by 2028/29, down from earlier estimates of around $152bn. The improvement came on the back of significant revenue upgrades, but structural pressures and policy choices mean spending is set to continue rising. The AOFM revised its issuance target to $125bn for the current fiscal year ($62.5bn already complete), down from $150bn previously. My review of MYEFO here has more analysis. 

That brings Macro View to a close for the year. Merry Christmas and best wishes.

Australia MYEFO 2025/26: Revenue windfall narrows deficits

The mid-year update (MYEFO) of Budget 2025/26 was handed down by Federal Treasurer Jim Chalmers in Canberra today. Australia's fiscal outlook has improved modestly since late March when the government delivered the budget it took to the May election at which it was returned for a second term. A revenue windfall has helped reduce forecast deficits to $143.2bn over the 4 years to 2028/29 from around $152bn previously.  

According to MYEFO, government revenue is forecast to be notably stronger over the next 4 years than previously anticipated. Resilient economic conditions and elevated commodity prices are set to deliver the government a revenue boost, but spending is also expected to keep rising - reducing the impact of the windfall on the bottom line. All told, improvements to the deficit are a modest $5.4bn this year (-$36.8bn) and $8.4bn over the forward estimates to 2028/29 (-$143.2bn). That translates to deficits of just over 1% of GDP.     

The chart below illustrates the key dynamics at play. Resilient economic conditions and elevated commodity prices deliver a windfall of $41.3bn over the next 4 years (green bars). The bulk of that is driven by a $36bn upgrade from personal income and company tax. However, a higher take-up of government programs and increases to other expenses are set to push up government spending over the next 4 years by $35.1bn (yellow bars). Meanwhile, new policy decisions included in MYEFO - mainly around tightening spending on consultants and changes to the home batteries program - improve the bottom line by a net $2.2bn (grey bars).  

As is becoming increasingly well documented, the government is expanding its use of 'off budget' spending measures - the most notable recent example being the 20% reduction to student loans. Off budget measures are set to average $23.5bn per year over the forward estimates. As a result, the headline budget deficit (yellow line) is forecast to be considerably wider than the underlying deficit (green line).  

In historical terms, government revenue (receipts) shown in the yellow line in the chart below is projected to run at elevated levels, at around 25-26% of GDP for the next few years. However, MYEFO reaffirms the budget faces significant pressure from rising costs in several areas (debt interest, NDIS, defence, hospitals, medical benefits and the Child Care Subsidy), while spending restraint is proving politically difficult in the current climate. The effect of this is that government payments at around 26-27% of GDP are set to outpace revenue, locking in the forecast deficits discussed earlier.   

With a trajectory of forecast deficits, government net debt is projected to remain on the rise for the next few years. Net debt as a share of GDP is set to rise from 20.1% in the current financial year to 22.6% by 2028/29. 

The key economic forecasts compiled by Treasury that shape MYEFO have not shifted significantly since the Budget was tabled in March - though there are some notable changes. The main shift is in the inflation outlook, which has been revised higher following the hot Q3 CPI report (see here). Headline inflation was marked up 0.75ppt to 3.75% for 2025/26 and then by 0.25ppt to 2.75% in 2026/27. In addition, commodity prices are seen remaining higher for longer, boosting the terms of trade and nominal GDP in the current financial year. These are all key factors behind the forecast boost to government revenue. Meanwhile, although slightly faster employment growth is now expected, the unemployment rate is anticipated to be 0.25ppt higher through this financial year and next. 

Treasury has broadly retained its forecasts for global economic growth. The outlook for 3% world GDP growth in 2025 is the slowest since the early 1990s weighed by tariff-related factors; however, a modest recovery is set to take place from next year.  

Macro (Re)view (12/12) | Unconvincing convictions

It was a week of unconvincing moves across markets as a clear narrative failed to emerge from the key Fed meeting. Rates were cut by 25bps - and the forecasts for further easing were retained - but divisions on the FOMC and a void of data are creating uncertainty. Overall, the US curve steepened, though more hawkish rate expectations elsewhere - most notably in Australia and the BoC holding steady - meant the USD was softer. Tech and AI-related plays continued to weigh on equities. Key events next week include November payrolls (Tuesday) and CPI (Thursday) in the US, and policy meetings for the ECB, BoE (Thursday) and BoJ (Friday).  

Ongoing concerns over the US labour market saw the Fed's FOMC cut rates by a further 25bps this week to a 3.5%-3.75% range. This was the third cut in succession, with rates now down by 175bps across the easing cycle since September last year. The divisions of policymakers' views remained a key focus coming out of the meeting: Miran voted for a 50bps cut while two others (Goolsbee and Schmid) objected to any cut at all, raising uncertainty over the path for rates.  

However, the updated dot plot still implies one further rate cut in 2026 and 2027 as the median forecast, despite expectations for a more optimistic economic outlook. Stronger growth is now anticipated in 2026 (2.3% from 1.8%) and 2027 (2% from 1.9%), reflecting the resilience of the US economy - though the forecasts for inflation in 2026 were lowered (headline PCE 2.4% from 2.6%, core PCE 2.5% from 2.6%), as was the unemployment rate in 2027 (4.2% from 4.3%). 

At the post-meeting press conference, Chair Powell said the current labour market conditions - higher unemployment rate and slowing employment - warranted easing policy. This is reinforced by the view that payrolls data are overstating employment gains by around 60k per month. Although inflation remains elevated to the 2% target, the FOMC's interpretation is that the overshoot is due largely to trade tariffs. This is seen as having a short-term impact on prices rather than sparking a renewed inflationary episode.   

Attention in the euro area turns to next week's ECB meeting with the Governing Council firmly expected to remain on hold, while in the UK the BoE is likely to cut rates by 25bps. Speaking with FT in London, ECB President Lagarde reaffimed rates remained 'in a good place' and that growth and inflation forecasts could be revised higher next week - perhaps a quiet nod to markets that have recently priced out any further rate cuts. 

The BoE's decision seemingly hinges on Governor Bailey switching his vote to support a cut, after the MPC was split 5-4 in favour of holding last time out. The missing piece of the puzzle then was the UK Budget, but the measures subsequently handed down by Chancellor Reeves in late November failed to alter a subdued growth outlook, proving no hurdle to a rate cut.    

In Australia, the RBA left the cash rate at 3.6% in a hawkish hold as the policy board highlighted increased risks around the inflation outlook (reviewed here). As such, the decision statement and Governor Bullock's press conference effectively communicated the easing cycle had run its course, and markets took this as a green light to price in 50bps of rate hikes in 2026.

However, a weak labour force report for November has given markets something to think about over the summer break. Employment fell by 21.3k in the month, posting its weakest result in 9 months to defy expectations for a 20k rise (reviewed here). The unemployment rate clung on to remain unchanged at 4.3%, but that was only due to a decline in labour force participation from 66.9% to 66.7%.

Australian employment -21.3k in November; unemployment rate 4.3%

A weak Australian labour market report for November has given markets something to think about following their hawkish repricing of the RBA rates outlook for two rate hikes in 2026.  Employment fell by 21.3k in the month, defying expectations for a 20k rise, with falling labour force participation (66.7%) the only variable that prevented the unemployment rate (4.3%) from rising.  

By the numbers | November 

• Employment posted its weakest result in 9 months falling by 21.3k in November, a large miss on expectations for a 20k rise. This followed a 41.1k increase in October, revised from 42.2k.  
• Australia's unemployment rate was unchanged at 4.3% against expectations for a rise to 4.4%. However, the underemployment rate increased from 5.7% to 6.2% (13-month high), pushing up labour force underutilisation from 10.1% to 10.5% - its highest reading since August last year.  
• Labour force participation declined from 66.9% in October (revised from 67%) to 66.7% in November. The employment to population ratio fell from 64% to 63.8%.    
• Hours worked stalled in November (0%) following gains of 0.5% in September and 0.4% in October. Annual growth fell from 2.1% to 1.2%. 

The details | November 

The upbeat result for employment in October (41.1k) has proved short lived, falling back by 21.3k in November. This was the 4th decline in monthly employment this year and its weakest result since last February (-62.2k). Full time employment fell by 56.5k, giving back all of October's gain (53.6k); however, part time employment rose by 35.2k, more than rebounding its 12.5k decline last time out. Employment gains over the 3 months to November averaged just 10.3k.    

Despite employment falling (-21.3k), the unemployment rate was able to remain unmoved at 4.3%. This was due to a surprisingly large fall in the participation rate from 66.9% to 66.7% that saw 23.4k people exit the labour force - the largest reduction seen in 9 months. Meanwhile, the employment to population ratio - the share of people in work - eased from 64% to 63.8%.   

The real weakness was beneath the surface. The broader underemployment rate (including unemployed workers and employed workers wanting more hours) rose sharply from 5.7% in October to 6.2% in November, a 13-month high and more reflective of the weakness in employment. This drove total labour force underutilisation (combining unemployment and underemployment) to a 15-month high at 10.5% from 10.1% previously. 

Hours worked slowed to the point of stalling (0%) in November, coming off the back of consecutive gains in September (0.5%) and October (0.4%). Over the year, hours worked lifted by 1.2% - but that has been heavily driven by part time workers (4.5%Y/Y) with growth in full time hours subdued (0.6%Y/Y).  

In summary | November 

Today's report continued the run of volatile labour force prints, making the underlying conditions hard to read with any precision. What is clear is that employment growth has slowed through the past year, outpaced by growth in the labour force. This dynamic has put upward pressure on the unemployment rate, though at 4.3% it still remains at a historically low level. 

Preview: Labour Force Survey — November

Today's Australian labour force survey for November (due 1130 AEDT) follows a hawkish RBA meeting on Tuesday that effectively signalled the end of the easing cycle. The policy focus remains on the inflation side of the mandate, with labour market conditions still assessed to be broadly consistent with the RBA's full employment objective - despite the unemployment rate drifting higher this year. Markets go into today's report - the final major datapoint on the local calendar for the year - pricing in around of 50bps of RBA hikes in 2026; however, a weak report has the power to curtail some of that hawkish outlook.    

November preview: Remaining on the fence 

A moderate 20k rise in employment is expected in November, with estimates ranging from 10 to 40k. Employment is coming off a net gain of 42.2k in October - only the second upside surprise relative to consensus since April. With slower employment growth expected, the unemployment rate is forecast to lift from 4.3% to 4.4% (range: 4.2-4.4%). 

Monthly reports have been unusually volatile of late, so markets have tended to stay on the fence. This has seen employment forecasts coming in consistently around the 20k mark. Year to date, employment has lifted by an average of 16k per month, but that has not matched pace with growth in the labour force, averaging 22.5k per month. The unemployment rate has trended higher through the year on this dynamic, though it still remains at low levels.   

October recap: Employment rises as a 6-month high  

Employment posted its strongest outcome in 6 months rising by 42.2k in October, more than double the 20k consensus. The full-time segment surged 55.3k to account for all of the headline gain, with part-time employment falling 13.1k. 

With employment rising strongly and the labour force participation rate holding at 67%, the unemployment rate fell back to 4.3% - reversing its rise to 4.5% in September. In addition, the underemployment rate fell from 5.9% to 5.7%, seeing total labour force underutilisation tighten from 10.4% to 10%. 

Total hours worked rose by 0.5% for the second month in succession, slightly outpacing the rise in employment (0.3%). Both the full time (0.5%) and part time segments (0.7%) saw hours worked advance. Annual growth in total hours lifted from 1.4% to 2.1%.