Daily Commentary BY THE CURVE TEAM –

Employment Data Trending in Right Direction

14th of September, 2018

The Australian employment markets continues to trend in the right direction in terms of employment growth and falling unemployment.

Employment growth resumed with gusto in August as the volatility in the month to month seasonally adjusted data continues. Total jobs growth was up 44,000 from the month after falling 4,300 in July. Despite the growth, the unemployment rate remain unchanged at 5.3% as the participation rate increased back up to 65.7%.

Looking through the monthly volatility, trend growth in employment for the month was strong at 29,000. This has seen the trend unemployment rate slip down to 5.3% and it should continue if jobs growth remains robust.

Despite the solid growth figures, a sizeable lift in wage growth could be some ways off. Underemployment remains elevated but more importantly, jobs growth is outpacing hours worked.

Total jobs growth is running at 2.5% while aggregate monthly hours worked is only growing at 1.8%. It means there is more people working but a little bit less, leaving plenty of slack to be absorbed before upward pressure on wages emerges.

That said, the RBA has repeatedly said progress on getting inflation back to the middle of the target band and a lift in wage growth will be gradual. The latest employment data is another brick laid along that long road.

David Flanagan

Director - Interest Rate Markets