Daily Commentary BY THE CURVE TEAM –

Employment Strong with a Caveat

19th of February, 2021

Employment’s strong recovery continued in January, but underlying softness is evident.

Headline unemployment dropped to 6.2% from 6.4% in January. Very encouragingly, full time employment was up nearly 60 000, whereas part time employment was down nearly 30 000.

Just over 50 000 full time jobs are needed to recover to pre-covid levels and nearly 60 000 total jobs are needed. If the rate of recovery continues then employment will have improved at a much faster rate than the RBA is expecting. That is still an ‘if’ though.

Victoria led gains, with 55 000 full time jobs gained and 44 000 part time jobs. Those working zero hours for economic reasons also improved markedly, down 11%.

Underlying softness remains in hours worked. They were down 4.9% which undid much of the recovery that had been underway.

This may well be attributed to lockdowns in Sydney over January. If so, it is positive that employers kept workers.

It shows businesses are confident that lockdowns will prove temporary. It will be interesting to see if similar occurs in Victoria with the recent lockdowns.

If hours worked is persistently low despite employment being strong, then pressure on wage growth will be subdued. Today, retail sales for January will be released.

Josh Stewart

Associate - Money Markets