HomeContributorsFundamental AnalysisAustralia: Jobs Recovery Continues Into Year End

Australia: Jobs Recovery Continues Into Year End

December Labour Force Survey. Total employment: 50k from 90k (unrevised from 90k); Unemployment rate: 6.6% from 6.8% (unrevised 6.8%); Participation rate: 66.2% from 66.1% (unrevised 66.1%).

  • The labour market recovery has been far stronger than anticipated.
  • Total employment is almost back to pre-COVID levels while under-employment, and those working zero hours for economic reasons, are almost back to more normal levels.
  • But the recovery has all been in part-time employment as full-time employment still well below per-COVID levels.
  • In addition, unemployment remains above pre-COVID levels as participation has lifted.
  • This suggests while there has been a solid bounce back from the shock, the labour market is quite different to what it was pre-COVID and the supply of labour continues to outstrip demand.

The Victorian economy re-opened on November 8th and with the ongoing recovery in NSW we had expected to see a positive employment run into the year end. Also, the Northern Beaches was not declared a hot spot until December 18, too late to have an impact on this survey.

In December total employment rose 50k (0.4%), a touch softer than Westpac’s +60k forecast and spot on the market median of +50k. Total employment has now lifted 518.8k from the April low and is just 87.6k (or 0.7%) below the level in March. This has been a far more solid recovery from the significant shock of the COVID lockdowns than was widely expected.

In the month full-time employment gained 35.7k/0.4% while part-time employment gained 14.3k/0.3%. Part-time employment has surged back in the early post COVID recovery and is now 24.7k/0.6% higher than in March. By contrast full-time employment continues to lag and is 112.4k/1.3% lower than it was in March.

While the November survey reported a decline in unemployment even with a solid lift in participation, we had expected to see the re-opening of the Victorian economy to continue to drive participation higher and that this would lift unemployment further. In the end, participation lifted 0.6ppt to 66.16% resulting in a 20.0k lift in the labour force and so driving a 0.2ppt fall in the unemployment rate to 6.6% (from 6.83% to 6.60% at two decimal places).

The solid trend improvement in underemployment continues, falling from 9.4% in November to 8.5% in December. The underemployment rate is now 0.3ppt lower than it was in March, a very unexpected outcome.

Westpac Banking Corporation
Westpac Banking Corporationhttps://www.westpac.com.au/
Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.

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