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.