December Labour Force Survey. Employment 21.6k, unemployment 5.0%, participation 65.6%.
Total employment printed a solid 21.6k gain in December which was in line with market expectations for +20k. This has locked in a solid trend pace of growth with a three month average gain of 29.1k.
Employment ended 2018 with a sound run. In the year to December total employment grew 268.6k, or 2.2%, which matches the six month annualised pace of 2.2%yr. While it is true that the momentum in the Australian labour market eased through 2018 – annual growth peaked at 3.6%yr in January – it can still be described as sound.
The mix of employment gains also painted a picture of a solid, rather than accelerating labour market with a –3.0k loss in full-time employment being more than offset by a 24.6k gain in part-time employment. Hours worked rose 0.1% (total employment rose 0.2%) as hours worked per person fell 0.1%. Through 2018 total hours worked increased by 1.5%yr which is quite a bit softer compared to the 2.2%yr pace in employment.
Given the December gain in employment it is not surprising that the unemployment rate eased back 0.1ppt to 5.0% (market median was for 5.1%). This fall was helped by a 0.1ppt moderation in the participation rate to 65.6% (65.63% at two decimal places) which limited the rise in the labour force to just 7.5k.
In December the gains were in Victoria (10.5k/120.2k in the year) and Queensland (11.6k/54.7k in the year) while NSW added just 3.8k (94.3k in the year). The labour market has softened in WA (–15.3k/–5.5k in the year) and saw a modest recovery in SA (1.1k/13.2k in the year).
Looking at the state unemployment rates highlights the relative strength of the various labour markets. On a national level, the unemployment rate has fallen from 5.5% in Q1 to 5.0% in Q4. Victoria was the state showing the greatest improvement with the unemployment rate falling –1.1ppts to 4.4% (now on par with NSW) while in NSW unemployment fell just –0.6ppts to 4.4%. The Qld labour market appears to have stalled with the unemployment rate lifting 0.1ppt to 6.2% while it has been flat in WA and SA at 6.2% and 5.6% respectively.
It is also worth noting that 2018 produced a –0.2ppt decline in the underemployment rate from Q1 to Q4. However, at 8.4% it is still at a historically elevated level.
For 2019 we are looking for a pause in the pace in employment growth due to the economic uncertainties surrounding the Federal Election at the same time as we expect to see a moderation in momentum in NSW and Victoria on the back of a moderation in housing activity. We are expecting this to slow employment growth to below the pace of growth in the labour force lifting the unemployment rate to 5.3% around mid-2019.
