Simon Murray, Research Analyst at Westpac, notes that Australian employment increased by 51k in June beating the market consensus expectation of +16.5k and Westpac’s +17k.
“With full-time contributing most of the gain +41k while part-time rose +10k, hours worked increased by 0.6% which all together rounds out a positive June employment result.”
“Yet, the six month annualised pace is down to 1.9% from a peak of 4.3% in August 2017, though June’s result means the three month average is 28k per month.”
“The Australian unemployment rate held at 5.4% as the participation rate reversed last month’s decline to lift to 65.7% from 65.5%.”
June’s employment result is a very positive one. Putting it into context, it still caps off a slower first half of 2018 for Australian employment growth than last year’s uplift of 3.4%. The six month annualised pace is down to 1.9% from a peak of 4.3% in August 2017. Yet, the last three months have been more positive, averaging 28k per month after a slow start to 2018 with employment growth stalling through February and March.
In line with the relationship over the past year, the participation rate is closely following changes in employment, keeping the unemployment rate fairly steady at around 5 ½ per cent. However, we are nearing a breach to 5.3% – which at the conventional one decimal place, would be a low for unemployment back to 2012.
Looking ahead, we expect employment growth to broadly meet growth in the labour force at around 1.7%. Ultimately, this implies the unemployment rate holding around 5 ½ per cent and therefore a persistent degree of residual slack in the labour market. By contrast the RBA is more optimistic, expecting the unemployment rate to gradually decline.”