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REPEAT:MNI Analysis: Job Gain Meets RBA Fcast But Risks Remain

By Sophia Rodrigues
     SYDNEY (MNI) - Australia posted jobs growth for the tenth straight month in
July, the longest streak of monthly gains since an 11-month string that ended in
January 2011.
     However, the jobless rate was unchanged at 5.6% but that followed an upward
revision to the June unemployment rate. In addition, the labor participation
rate increased.
     The data will comfort the Reserve Bank of Australia, which is relying on
continued growth in jobs to gradually eliminate the spare capacity in the
economy. The ultimate aim is to see wage growth accelerate but whether and how
much that would happen is a key uncertainty for the RBA and thus for monetary
policy.
     The 10 straight months of job gains led to total job creation of 277,900,
or an average gain of around 27,800 jobs per month. In the seven months so far
this year, jobs have increased 202,400, a monthly average of 28,900. A big
proportion of the gain was due to full-time jobs, which rose at monthly average
of 21,900 while part-time jobs rose at an average of around 7,000.
     Despite the continued gains in employment in the last 10 months, the
jobless rate in July was the same 5.6% as it was at the beginning of the period.
This is because the participation rate has been steadily increasing during this
period to 65.1% in July from 64.4% in September last year.
     A still-better gauge of the labor market is the employment-to-population
ratio, which rose to 61.4% in July from 60.8% in September last year. 
     Both the participation rate and the employment-to-population ratio were at
levels last seen in December 2015.
     There were two negatives in the latest release which could have
implications for RBA policy: the entire gain in jobs in July was due to rise in
part-time work, which offset a fall in full-time jobs; and monthly hours worked
in all jobs fell 14.4 million hours or 0.8%.
     These measures indicate spare capacity in the economy didn't fall as much
as the growth in jobs indicate, with the underemployment rate likely remaining
at an elevated level.

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