Unemployment data on both a trend and seasonally adjusted basis was unambiguously solid in October, according to the Labour Force report from the Australian Bureau of Statistics (ABS).
The trend unemployment rate fell from 5.2% to 5.1% in October 2018, while the seasonally adjusted rate remained steady on a multi-year low of 5%.
“Today’s fall in trend unemployment to 5.1 percent marks the lowest unemployment rate since early 2012. This month is the 25th consecutive monthly increase in employed full-time persons with an average increase of 20,300 employed per month,” according to ABS Chief Economist Bruce Hockman.
The report does zero to change the Reserve Bank’s monetary policy stance of waiting and watching and not moving interest rates.
Trend employment rose 25,400 in October with full-time employment increasing by 22,900 and part-time employment by 2,500. The seasonally adjusted number of persons employed increased by around 32,800 last month.
The ABS said that over the past year, trend employment increased by 285,900 or 2.3%, which was above the average year-on-year growth over the past 20 years (2.0%). That’s still solid but it is down on the 3.6% in late 2017.
In the two years since October 2016, 560,000 new jobs have been created, the jobless rate has fallen from 5.7% to 5.1% and the number of people unemployed has dipped 6% from 724,200 to about 680,300.
The participation rate has leapt from 64.7% to a near high 65.6 as more people have joined the workforce looking for jobs.
The trend underemployment rate remained steady at 8.3% in October 2018 and the trend underutilisation rate decreased 0.1 percentage points to 13.4t%
The trend participation rate remained steady at 65.6% in October 2018 (the same reading as the seasonally adjusted rate)
Trend monthly hours worked increased by 0.2% in October 2018 and by 2.0% over the past year.
The states and territories with the strongest annual growth in trend employment were NSW (3.5%) and Victoria (2.6%), the ABS data showed.
“Of the 20,300 average monthly increase in employed full-time persons over the past 25 months, New South Wales contributed 35.9%, Victoria 30.5%, Queensland 16.5% and Western Australia 12.1%. The contribution of the other states and territories was largely flat” said Mr Hockman.
The AMP’s Chief Economist, Shane Oliver wrote in a note yesterday afternoon that
“Continued solid growth in jobs and total hours worked will benefit consumers through higher aggregate household income, as well as boosting consumer sentiment.
“However, the still large amount of labour market slack means wage inflation pressures will remain weak. Meanwhile, the Australian consumer continues to face headwinds due to the ongoing housing market correction and a savings rate that is already extremely low.
“As result we remain of the view that the RBA won’t start raising interest rates until 2020 at the earliest and given the housing-related downturn there is a significant chance that the next move could turn out to be a rate cut – although this would be unlikely before second half next year as it will take a while to change the RBA’s relatively upbeat thinking on the economy and rates,” Dr Oliver said.
