Australia: Modest jobs gain extends recent and likely temporary consolidation - Westpac

Andrew Hanlan, Senior Economist at Westpac, notes that in June, employment in Australia rose modestly, up 7.9k, broadly as expected (mkt median 10k and Westpac 12k).

Key Quotes

“The unemployment rate rounded higher, to 5.8% (5.79%), up from 5.7% (5.72%). The participation rate rose ever so slightly, to 64.86% from 64.84%. That modest jobs result for June comes on the heels of a solid increase in May, with employment expanding by 19.2k, revised higher from 17.9k.

The June outcome was sufficient to hold annual jobs growth at 1.9%. However, over the past six months, employment rose by only 0.4%, or 0.7% annualised. The overshoot of 2015, when employment surged by 3.0% in the year to November, has given was to a consolidation.

In terms of the detail for June, there was a jump in fulltime employment, up 38.4k, more than offsetting a 30.6k dip in part-time jobs. Despite this, it remains the case that job creation of late has been concentrated in part-time positions, +1.7% over the past six month and +3.7% over the past year. Fulltime employment advanced by 1.1% over the past year, notwithstanding a 0.2% decline over the first half of 2016.

This employment mix, with strength in part-time, reflects in part: (1) a shift in the economy towards sectors which are more part-time in nature, such as hospitality; and (2) is likely in part an aspect of the current consolidation.

Where to next? Is the employment consolidation evident over the first half of 2016 likely to be temporary or more enduring? Our assessment is that the labour market will regain momentum over the second half of this year, consistent with positive fundamentals.

Activity is jobs friendly, with low interest rates driving a home building boom and the lower dollar boosting labour intensive service sectors, such as education and tourism. Our jobs index has strengthened over recent months, as private business surveys report actual business conditions are at elevate levels, pointing to the prospect for solid employment gains near-term.”