ANZ: Employment Falls In October But A Rebound Is Imminent

In the wake of the labour market report, ANZ note that they are not "too worried about the weak month. Victoria's later entry into lockdown than NSW's saw a lot of the impact on its labour market come through in the October data. And the survey reference period ended 9 October, before NSW started to reopen, so we had thought that the risks were weighted to the downside. Nevertheless, we still expect a rapid post-lockdown rebound in employment and hours worked over the next few months. Newly lodged job ads have jumped 39% over the past two months in NSW; over the past month, they've lifted 15% in Victoria and 12% in the ACT, to be at or above pre-lockdown levels, according to the Internet Vacancy Index. Furthermore, today's data show that in NSW the number of people working zero hours for economic or other reasons fell by 61K (-28% M/M). NSW has also already recovered around 45% of the loss in hours worked. The official unemployment rate could be a bit bumpy over coming months, depending on the relative pace of the recoveries in employment and participation. But we expect to see a solid fall in unemployment to around 4% by end-2022, with underemployment also set to get a lot lower. In our view, this should help push wages growth up to around 3% Y/Y by end-2022 and bring forward the RBA's first rate hike to H1 2023."