Economy Almost Able To Keep Up With Labour Force Growth

November employment growth was significantly stronger than expected and above the highest forecasts. There were 61.5k new jobs up from October’s downwardly revised 42.7k. While the unemployment rate is gradually shifting higher, the economy is still strong enough to create job growth of 3.2% y/y, where it has been on average since June, despite 425bp of tightening and a slowing economy. This data keeps the February 6 RBA decision “live”.

• The labour market remains tight but continued to ease in November with metrics the RBA looks at all deteriorating on the month.
• The labour market again was able to absorb most of the 0.5% m/m increase in the labour force but not all of it and so the unemployment rate ticked up 0.1pp to 3.86%. October was revised up to 3.75% and so a rounded 3.8%. It remains very low but is now 0.4pp higher than a year ago.
• The participation rate rose to a new record high of 67.2%. Labour force growth is currently exceeding job growth by around 0.5pp, which if maintained suggests further rises in the unemployment rate going forward.

• Full-time employment (FT) outpaced part-time (PT) in November at +57k versus +4.5k but the 6-month averages show that there has been a shift towards PT (PT +26.7k vs FT +8.6k) given the slower economy and uncertain outlook. Hours worked also reflect this trend – they were flat in November to be down 1.5% 3m-annualised.

Source: MNI - Market News/ABS