MNI 5 THINGS. Australia Unemployment Rate Seen Stable At 5.0%

By Lachlan Colquhoun

     SYDNEY (MNI) - Australian Labour Force Data for January will be released on

Thursday. Here are five factors to look for in the release from the Australian

Bureau of Statistics:

Unemployment rate seen as steady. 

Financial markets expect the unemployment rate to be unchanged at the multi-year

low 5.0%. The rate reached 5.0% in September 2018, after beginning 2018 at 5.5%,

with a brief clip higher to 5.1% in November.

Reserve Bank watching closely.

Falling unemployment and higher wages growth are key to the RBA's positive

outlook for the economy, believing they will flow through to higher consumption

and drive inflation higher. Wage Index data released Wednesday failed to meet

expectations, but at an annualised 2.3% still has wages travelling higher than

inflation, which is currently 1.8%. The RBA is forecasting unemployment to stay

at 5.0% throughout 2019 before falling to 4.9% in 2020.

Employment growth above trend. 

The question for the Australian economy is what level of unemployment represents

full employment. Over 2018, trend employment increased by 284,100 persons, or

2.3%, which is above the 2.0% average annual growth over the last 20 years.

23,600 persons found employment in December, a number which will be compared

closely with tomorrow's result as it is estimated that over 15,000 new jobs need

to created each month for unemployment to continue to fall over the longer term.

Full time employment has been falling. 

Jobs added in the last months of 2018 were almost exclusively part time. In

December, for example, there was a decrease of 3000 in full time employment

while part time employment added 24,600, accounting for all the gains. This

reversed the trend from the first part of 2018.

Strange pattern for NSW and Victoria. 

Unemployment is significantly lower in the largest States of NSW (4.3%) and

Victoria (4.2%), where growth is also higher than the national average of 2.8%.

These are two states, however, where housing prices have fallen most steeply in

what is one of the main downside risks for the economy. The RBA is aware of this

disparity and it is a factor in its comparatively sanguine view on the impact of

falling house prices.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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