CBA: Further Cooling In The Labour Market

In the wake of today’s labour market report CBA note that “the monthly labour force survey can be volatile. January, in particular, can be seasonal as there is a lot of churn in the labour market as people change or start jobs. The ABS notes that there were a number of unemployed people waiting to start work (i.e. those who have a job but haven’t started in it yet). While that number is higher than levels seen prior to the pandemic, it is well down from levels in January 2021 and 2022. Indeed, the number in January 2023 was consistent with the pre‑pandemic trend."

• “Today’s labour force data is a further sign of a cooling in the labour market. Put another way, the labour market is slowly loosening. Job ads and vacancies have been declining for several months, a sign of retreating labour demand. That said, it’s hard to be conclusive yet given difficulties with changing seasonal patterns and tentative data showing a bounce may occur in February.”
• “Nevertheless, it may well prompt the RBA to reassess their outlook for the labour market, and by extension the future path of monetary policy tightening. There will need to be a full reversal in next month’s labour force report to keep the RBA’s forecasts on track. The next data print with implications for RBA monetary policy is next Wednesday’s Q422 Wage Price Index.”