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Justin Smirk, Research Analyst at Westpac, notes that Australian employment rose 22.6k in April beating both market (20k) and Westpac’s (17k) expectations.

Key Quotes

“Full-time employment rose by 32.7k while part-time fell 10.0k. Past employment results were revised with March now -0.7k (was +4.9k) and February is now -7.4k (was reported as -6.3k last month and originally reported as +17.5k). This trend for downward revisions is consistent with a soft patch in the labour market.”

“Despite a sound print on employment in April the unemployment rose to 5.6%, (5.60% at two decimal places) a full percentage point on 5.5% in March (5.53% at two decimal places). This jump was due to a 33.2k lift in the labour force with participation bouncing to 65.61%.”

“The three month average gain in April was just 4.9k compared to an average of 27.7k for the previous year. Momentum has stalled with annual employment growth dipping to 2.7%yr from a January peak of 3.6%yr. The six month annualised pace is now 2.5% while the four month annualised pace is just 1.3%yr.”

“For the RBA, the risk is that unemployment may not fall enough to boost wages. So a rise in unemployment, even due to a rise in participation, must be unnerving. The labour market is more dynamic now with rising demand being met by rising supply as female rich employment is being met by rising female participation. But driving the unemployment rate higher has been the underperformance of the growth of male jobs compared to the growth in the male labour force.”

“We are expecting the unemployment rate to hold around 5.5%-5.6% till end 2018. And even if employment outperforms expectations, rising participation is likely to prevent fall in unemployment. In fact, it is possible that the unemployment could rise with our forecasts for employment due to a rise in participation.”