Disappointing Jobs Data Impacted By Holidays

July employment was weaker and the unemployment rate higher than expected but it seems to be driven by school holidays, just as the softer April data was. We will need the August data to ascertain if there has been a turn in employment. The RBA noted in its August minutes that there have been “early signs that the labour market might be at a turning point” and the July data probably have not made this statement more definite but have made it even more likely the RBA will be on hold in September.

• Employment fell 14.6k in July after rising 31.6k, which was weaker than expected but within the range of forecasts. But it is still 235.8k higher in 2023 with full-time +189.1k and part-time only +46.7k signalling that labour shortages have been eased by making employees full-time. While FT employment fell 24.2k in July it is still running at 4.1% y/y but PT is now seeing a pickup in 3-month momentum. The participation rate eased 0.1pp to 66.7% but labour force growth continued at around 3% y/y.
• The unemployment rate rose 0.2pp to 3.7% in July with the number of unemployed rising 35.6k but holiday months January and April also saw rises. The number of unemployed is up 55.5k y/y. The RBA cited the trough in the underemployment rate but it didn’t rise further in July staying at 6.4%. But it is now 0.5pp higher than the February trough.
• Hours worked rose 0.2% m/m with part-timers taking up the slack (+1.9% m/m) as FT hours fell 0.1% m/m. Total hours are up 5.2% y/y compared with employment’s 2.8% and the ABS noted that the strength “shows that it continues to be a tight labour market”.
• The ABS observed that there is a change in when holidays are taken and so when jobs are started/left and that this needs to be considered when looking at the monthly data.

Source: MNI - Market News/ABS