Australia: Another fall in the unemployment rate - ANZ

In view of Felicity Emmett, Senior Economist at ANZ, Australia’s labour market is clearly in better shape than it has been for some time, with a further gain in employment and another fall in the unemployment rate in October. 

Key Quotes

“We expect the expansion in jobs growth to continue (albeit at a more moderate pace) over the near term given the solid prospects for economic growth. Further inroads into unemployment will evidently be required before we see a meaningful acceleration in wages.”  

“Employment rose a modest 3.7k in October, following an upwardly revised gain of 27k in September (previously +20k). This continues the long run of monthly employment gains: this is the 13th straight monthly gain in jobs, the longest uninterrupted stretch since 1994 when the economy was dragging itself out of the very deep recession of the early 1990s.”

“Full-time employment was strong with a rise of 24k against a fall of 21k in part-time jobs. This helped to drive another rise in hours worked (+0.3% m/m), which are now up 3.2% from October last year.”

“Across the states, performance was mixed. Queensland kept the national number in the black with a rise of 13k, while all other states recorded small falls in employment.” 

“Importantly, the unemployment rate continues to edge lower, falling from 5.5% in September to 5.4% in October. This is a welcome development, with the gradual reduction of spare capacity likely to eventually put pressure on wage growth.” 

“The improvement in the labour market is encouraging for the outlook. While monthly job gains are likely to slow from the recent rapid rate, our ANZ labour market indicator points to further falls in the unemployment rate. Rising employment will support household income, but as yesterday’s weak Wage Price Index shows the reduction in spare capacity in the labour market is not yet feeding into stronger wages growth. Further inroads in the unemployment and underemployment rates are clearly required before we see a material upswing in wages growth.”