RBC: A 46.3k Drop In Employment Masks A Recovery Already In Progress

RBC note that "Australia-wide employment fell another 46.3K in October, defying consensus expectations for a 50K gain. The losses were concentrated in full-time jobs with a smaller drop in part-time employment. A lift in the participation rate to 64.7% (from 64.8%) also resulted in the unemployment rate lifting from 4.6% to 5.2%, well above expectations (4.8%). Employment is currently 132k below pre-COVID levels, and 334K below the pre-Delta (July 2021) level. Delving into geographical composition of this month's numbers though, we would argue the details are actually reasonably positive. As foreshadowed by a raft of vacancy indicators and by yesterday's payroll report, the labour market began to pick up in NSW despite lockdowns only on the 11th October - past the scope of the labour force sample period (which ran from 26th Sept to 9th Oct). Employment in NSW rose 0.6%, the participation rate by a healthy 0.8pts and hours worked rose 3.9% (building on a surprise 2.7% gain already in the September report). The headline Australia-wide job losses were mostly a function of weaker Victoria numbers (employment -50K, unemployment up 29K, participation rate down 0.4%, hours worked -4.0%). Given Victoria was later to both enter and exit lockdown than NSW and hadn't previously seen the same extent of employment weakness either, we see the headline numbers in this report as largely representing a logical Victoria catch-up to the "worst" of lockdowns."