Australia: Good news on employment front - TDS

Analysts at TDS explain that the Australia’s February employment report contained good news: full-time +65k to be 4.0%/y and while part-time was -48k, annual growth remains respectable at 2.4%/y.

Key Quotes

“The unemployment rate ticked up to 5.6% due to the participation rate reaching 65.7%, the second highest on record (although NZ boasts a lofty 71%).”

“The RBA's insistence that there is ample spare capacity in the labour market means the markets tend to ignore such good reports. Yes the unemployment rate is a half-percentage point above the NAIRU of 5%. However, the also oft-quoted underutilisation ratio is still entirely skewed towards the student/young adult market of 15-24 years (first chart). Echoing similar frustrations to our Canadian brethren we doubt that leaving the cash rate low for longer can bring this ratio down (i.e. more a role for industrial relations policy).”

“Thirdly, the acceleration in hours worked in 2017 was entirely skewed towards full-time employment (second chart) while the early months of 2018 hints at rebalancing. In the two months to date, growth in male/female and full-time/part-time hours worked has converged, suggesting a healthy labour market, and should not concern the RBA.”