A much stronger than expected headline employment gain in June sees 88.4K jobs added (BBG median looked for +30.0K), with full-time (52.9K) and part-time (+35.5K) employment rising. The rising levels of employment outstripped the 0.1ppt uptick in participation, resulting in a 0.4ppt fall in unemployment, which hit 3.5% (BBG median 3.8% & prev. 3.9%). When it comes to more defined measures of slack, underemployment ticked away from cycle lows, moving up to 6.1% from 5.7%, while underutilisation held steady at 9.6%.
- The ABS note that “this is the lowest unemployment rate since August 1974, when it was 2.7 per cent and the survey was quarterly… The large fall in the unemployment rate this month reflects more people than usual entering employment and also lower than usual numbers of employed people becoming unemployed. Together these flows reflect an increasingly tight labour market, with high demand for engaging and retaining workers, as well as ongoing labour shortages.”
- Re: the wider employment trend, the ABS notes that “employment growth continues to follow a reasonably consistent trend. Average monthly employment growth over the past three months has been around 51,000 people and around 52,000 since November 2021. This was similar to the average monthly increase we saw over the year prior to the Delta lockdowns (61,000 people). The growth continues to be noticeably stronger than before the pandemic when the trend was around 20,000 people each month.”
- Seasonally adjusted hours worked moderated, with the ABS flagging that “in line with large numbers of COVID-19 cases in June, the number of people working reduced hours due to illness continued to be high. This reflected ongoing disruption associated with the Omicron variant and cases of influenza There was around 780,000 people working fewer hours than usual due to own illness in June 2022, almost double the usual number we see at the start of winter.”
- The labour market continues to tighten, with the ABS highlighting that “this equates to around one unemployed person per vacant job (1.0), compared with three times as many people before the start of the pandemic (3.1).”
- This report should help keep RBA tightening frontloaded.