Australia: Unemployment returns to 5.2% – Westpac

Simon Murray, analyst at Westpac, suggests that for the Australian economy, the most notable update in the September Labour Force survey is that the unemployment rate declined from 5.3% to 5.2%, against consensus expectations for a steady read.

Key Quotes

“It comes from a moderate increase in employment of 14.7k (in line with consensus) but a retracement in the participation rate from 66.2% to 66.1%.”

“September’s dynamic goes against the trend we have seen in 2019. Employment growth has averaged 25k per month in the year, but stronger growth in labour supply has seen the unemployment rate move up – this is the first monthly decline we have seen since February. However, note that in August, the unemployment rate was 5.25% at two decimal places and is now 5.20%. The modest 0.05ppt movement is not uncommon given the volatility in the Labour Force survey.”

“The most notable update in the September Labour Force survey is that the unemployment rate declined from 5.3% to 5.2%, against consensus expectations for a steady read. That comes from a moderate increase in employment of 14.7k (in line with consensus) but a retracement in the participation rate from 66.2% to 66.1%.”

“September’s dynamic goes against the trend we have seen in 2019. Employment growth has averaged 25k per month in the year, but stronger growth in labour supply has seen the unemployment rate move up – this is the first monthly decline we have seen since February. However, note that in August, the unemployment rate was 5.25% at two decimal places and is now 5.20%. The modest 0.05ppt movement is not uncommon given the volatility in the Labour Force survey.”

“Overall, we think this month’s modest decline in the unemployment rate will be temporary and emphasise we are still a long way away from the RBA’s full employment aim of 4.5%. It does however allow the RBA some more time to monitor the economy before having to act again.”