Look Through Volatility, Jobs Market Tight But Easing

Employment growth printed lower than expected while the unemployment rate was better than expected due to unemployed people leaving the labour force, according to the ABS. The data has been volatile and this development may be reversed next month and so best to look at the trends. Average new jobs in Q3 were lower than Q2 and the slower full-time employment growth and higher part-time trend continued. The labour market remains tight but it is showing signs of gradual easing and so this data points to the RBA on hold in November.

• Average new jobs in Q3 were 23.1k m/m down from Q2’s 29.9k and September employment growth remains robust though at 2.9% y/y but hours worked are now in line. The breakdown between full-time (FT) and part-time (PT) is showing some cracks. In Q3 there was a shift towards PT (+122.k) from FT (-53.2k) signalling slower labour demand but also less confidence in the activity outlook. FT hours fell on average 0.5% m/m in Q3 after +0.4% in Q2 while PT rose 1.1% after -0.1%. Total hours fell an average 0.3% m/m after +0.3%.

Source: MNI - Market News/ABS

• The unemployment rate almost printed at 3.5% in September as was 3.557% but the Q3 average was 3.7% up from 3.6%. The RBA forecast 3.9% for Q4 in August, which still looks feasible but may be slightly lower. The number of unemployed fell 19.8k in September but for Q3 it rose 16.7k after falling 5.7k and is up slightly this year.
• The ABS pointed to unemployed people leaving the labour force and this is reflected in the 0.1% m/m drop in the labour force, the first since the Covid-impacted September 2021. School holidays have created volatility this year and this data may have also been impacted. Labour force growth moderated to 2.8% y/y from 3.2% but the working age population continued to grow at 2.8% y/y. This resulted in the participation rate falling 0.2pp to 66.7% but Q3 was in line with Q2 overall.

Source: MNI - Market News/ABS

• The underemployment/underutilisation rates were also impacted by the drop in the labour force falling 0.2pp and 0.3pp respectively in September but Q3 rose 0.1pp and 0.2pp compared with Q2, also consistent with a slight easing in labour market conditions.