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Justin Smirk, Research Analyst at Westpac, notes that in the year to employment has grown 150.8k in NSW compared to a smaller 72.9k Victoria and yet unemployment has fallen -1.4ppt there compared to a smaller 0.3ppt fall in NSW.

Key Quotes

“This is because there has been a surge in participation NSW, particular for females who have been very responsive of late to changes in employment.”

“So we caution that the recent decline in underutilisation (underemployment plus unemployment) may not be a strong sign wages are about to lift.”

“The decline in NSW underemployment through 2016, on the back of declining participation, is yet to produce the expected lift in wages. As such the recent decline in underutilisation in Victorian, on the back of declining participation, may not be a signal for a lift in wages.”

“The September quarter Wage Price Index (due for release November 14) is going to be closely watch.”

“Victorian wages have been very responsive to changes in underutilisation so they are likely to be the focus of many.”

“It is in NSW, where strong employment has been offset by rising participation, where the greatest pressure on wages may lie.”

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