MNI DATA ANALYSIS: Australia Posts Record Job Gains in 2017

--But Rising Labor Participation Could Prevent Wage Growth Acceleration

By Sophia Rodrigues

     SYDNEY (MNI) - Australia's labor market ended the year 2017 on a very

buoyant note, creating in excess of 400,000 for the first time in a calendar

year, and recording 15 months of uninterrupted job gains that saw a record

number of job creation.

     The data removes the downside risk to the Reserve Bank of Australia's

monetary policy, though the rise in labor participation rate means spare

capacity in the economy is not diminishing as much as the record job creation

suggests. How that pans out is very important because that would determine

whether and how soon wage growth accelerates, and how it affects overall

inflation.

     Data published by the Australian Bureau of Statistics Thursday show the

economy created 34,700 jobs in December. The outcome was much higher than MNI

survey median forecast and just within the range predicted by economists in the

poll. Economists at National Australia Bank were the only ones with a prediction

that was closest to the outcome -- of 35,000 employment growth.

     Despite strong job gains, the unemployment rate rose because the labor

participation rate rose to 65.7% matching a rate last seen in January 2011. The

labor participation rate recorded a steady increase in 2017 starting from 64.8%

at the end of 2016 to 65.7%. The rise indicates more workers are entering the

labor force as the labor market improves but it could also have a dampening

influence on wage growth.

     In 2017, employment grew 3.3%, with a year-on-year jobs gain of 403,100, an

average of 33,600 per month. The total jobs growth during the 15-month streak

was 477,000 -- the best on record.

     An overwhelming majority of the employment gains in 2017 came from

full-time jobs, which rose 303,400.

     Hours worked in December fell 4.2 million hours to 1,736 million hours.  

     Labor-force survey for December published by the Australian Bureau of

Statistics on Thursday:

                                           December                     November

--------------------------------------------------------------------------------

                         (M/M, seasonally adjusted)   (M/M, seasonally adjusted)

                                                            +63,600(revised from

Employed Persons                            +34,700                     +61,600)

                          +15,000 (range -10,000 to

MNI Consensus                              +35,000)

Full-time Employment                        +15,100                      +43,600

Part-time Employment                        +19,500                      +20,000

Unemployment Rate                              5.5%           5.4% (no revision)

MNI Consensus                                  5.4%

Participation Rate                            65.7%          65.5% (no revision)

MNI Consensus                                 65.4%

Unemployed Persons                          +20,500                       +5,400

Employment to

Population                                    62.0%          61.9% (no revision)

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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