What happened in November?
Australia’s jobs market took a small step back in November, with employment down by 21,300 according to the latest Australian Bureau of Statistics (ABS) Labour Force data. That followed a strong October, when more than 41,000 jobs were added.
CBA economists say these swings are common in monthly data, however the labour market is still strong and tighter than the Reserve Bank of Australia (RBA) would like.
“This release is noisy, but the signal is clear - the labour market remains strong,” CBA Economist Harry Ottley said.
“Inflation pressures have reemerged, wage costs are high are the economy is running close to full capacity, all while demand in the economy is picking up. This means the RBA won’t be cutting rates any time soon,” said Ottley.
What is trend unemployment?
Trend unemployment smooths out the month-to-month volatility to show the underlying direction of the jobs market. While the headline unemployment rate stayed at 4.3%, the trend measure also fell to 4.3%, signalling that conditions remain firm. CommBank’s own data backs this up, pointing to steady job growth of around 26,000 last month according to the Wage and Labour Insights released earlier this week.
What’s behind the numbers?
Full-time jobs fell sharply by 56,500, while part-time roles rose by 35,200. Hours worked were flat, and underemployment jumped to 6.2%, though CBA economists say that spike is likely mostly statistical noise. Across the states, NSW recorded the lowest unemployment rate at 3.9%, while Victoria was higher at 4.7%. South Australia led annual employment growth at 3.7%, while NSW lagged at just 0.5%.
What does this mean for interest rates?
The RBA has been hoping for signs of cooling in the jobs market to help bring inflation back to their 2-3 per cent target. A tight labour market can keep wages and costs high, making it harder to control inflation.
“For now, the job market is cooling but only very gradually, and the RBA will see this as confirmation that demand remains strong.,” added Ottley.
See Harry Ottley and Lucinda Jerogin’s full analysis here.
