Daily Commentary BY THE CURVE TEAM –

Labour Data Misleading

20th of January, 2021

Payroll data over December appears worse than the reality.

Payrolls were down 6.3% from December 5 to January 2. However, this follows a usual seasonal pattern at the end of the year.

Testament to the seasonality of the falls was all the states being down similar proportions. It would be expected that NSW, which had lockdowns imposed across the Northern Beaches would have had a disproportionate effect if employment was impacted independent of seasonality.

Tomorrow’s labour force survey for December uses the first two weeks of the month. Over this period payrolls were up 1.1%, which corresponds to a gain in jobs of over 65 000.

There remains a clear upside to employment with Victoria still lagging the rest of the country. The next tailwind for employment will come when state and international borders re-open permanently.

The virus in Australia seems well contained currently, which bodes well for the potential for domestic borders to re-open. International borders are less clear.

It will depend on the pace of vaccination across the world, which at this stage appears will get borders opened by the earliest the end of this year.

Josh Stewart

Associate - Money Markets