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.
