Tight Conditions Weigh On Jobs, Shouldn’t Change RBA Thinking

Employment rose 0.9k in September which was below the lower end of expectations of +10k but August was revised up to 36.3k from 33.5k). The unemployment rate was stable at 3.5%, as expected, and so was the participation rate at 66.6%. The details, however, point to labour shortages continuing to transition people from part-time jobs (-12.4k) to full-time jobs (+13.3k). As a result, this data is unlikely to change the RBA’s +25bp thinking.

• Hours worked fell by 0.2%m/m for employed full-time persons due to a higher-than-usual number of people taking annual leave in September for the school holidays compared to the previous 2 years which were Covid affected.There was also a 14% increase in people working fewer hours due to illness. Hours worked in all jobs were flat on the month.
• The underemployment rate was also steady at 6% down from 6.6% at the start of the year. While underutilisation rose 0.1pp to 9.6% (10.8% in January). The number of unemployed rose 8.8k but the series is still down 21%y/y and showing negative 3-month momentum.
• While the vacancies-to-unemployment ratio appears to have peaked, it remains extremely high implying that employment gains should continue, even if at a more moderate pace because firms continue to find suitable candidates scarce.