Australia: Another strong jobs report – ANZ

Felicity Emmett, Senior Economist at ANZ explains that it was another strong labour market report for Australia in July, showing employment up 28k and unemployment at 5.6%.

Key Quotes

“Some of the detail was a bit softer than the headline: full-time jobs fell, hours worked were down and the jobs gains were narrowly based.  But we wouldn’t overplay these details. The labour market is clearly improving and additional job gains look likely in the near term. Further out, we continue to think that ongoing inroads into the unemployment rate will be more difficult to achieve, in part because the strong pace of public sector employment gains is unlikely to be sustainable.

• Employment rose 27.9k in July, building on the strength of the past few months. The unemployment rate printed at 5.6%, down a tick from an upwardly revised 5.7% in June. 
• The strength was narrowly based geographically, with Queensland (+27k) accounting for nearly all the jobs growth. NSW employment rose very modestly (+0.5k) while employment in Victoria (-2.2k), Western Australia (-1.3k) and Tasmania (-2.2k) fell.
• After extraordinary strength over the past few months, full-time employment fell 20.3k, while part-time jobs rose 48.2k. We would not read too much into this, given that annual growth in full-time employment remains very strong at 2.4%. The weakness in full-time employment was reflected in hours worked, which fell 0.8% m/m.
• Underemployment looks to be unchanged in the month. Our rough seasonal adjustment of the ABS monthly series suggests that underemployment remained at 8.4% in July, in line with June but well down from its peak of 8.9% in February.   
• While the recent improvement in the labour market is an encouraging sign for the RBA, and business surveys suggest some near term downside risk to the unemployment rate, further material inroads into the unemployment rate look likely to be more difficult to achieve over the next year or so, particularly if housing construction slows as we expect and the pace of public sector jobs growth slows.”