Australia: Surprise employment report for a second consecutive month - Westpac

Andrew Hanlan, Research Analyst at Westpac, explains that the Australian employment report surprised to the upside for a second consecutive month as the employment increased by 3.7.4k in April and by 97.4k over the past two months – no doubt an exaggeration of the underlying trend.

Key Quotes

“Full-time fell 11.6k in the month, but that comes after +73.9k in March.”

“Over the past year, employment grew by 1.6%, in line with population growth. Full-time is up 1.0% over this period and part-time is up 3.0%.”

“The unemployment rate printed at 5.71% in April, moderating from 5.86% in March. The participation rate was steady at 64.8%, after rebounding over recent months.”

“Hours worked were disappointing in the month, down 0.26%, to be up 1.3% over the past year.”

“Employment over the past year: a story of two halves

The jobs results for the six months to April relative to the prior six months to October 2016 highlights the turnaround in reported labour market conditions. Employment increased by 1.4% in the six months to April, including a 1.2% rise in full-time and 1.7% gain in part-time. Over the six months to October 2016, employment grew by only 0.2%, weighed down by a 0.3% decline in full-time.”

“Comment 

The labour market report, while volatile month to month, adds to the evidence that the Australian economy has rebounded from the soft spot evident in 2016, associated with the July Federal election.

The employment growth over the past six months brings the official data more into line the Westpac Jobs index, which points to further solid gains in the months ahead.

Considerable labour market slack persists, which will continue to weigh on wage and consumer inflation. The positive is that a strengthening of jobs growth will provide some support to household incomes and in turn consumer spending. Looking further ahead, in 2018, we expect the labour market to cool – as home building activity turns down and as China slows and commodity prices retreat further.”