Today’s release of the October labour force data has caught the markets unawares with some very strong employment growth. The strong numbers have removed almost any lingering thoughts of a rate cut from the RBA in the near term and, as a result, seen the A$ climb almost a cent to US$0.713.
The headline, seasonally adjusted data, is so strong as to be create immediate scepticism. Against expectations of a lift of around 15,000 in jobs we have seen a huge 58,600 new jobs added. Of these 40,000 were full-time. Over the course of the year to date we have seen a total of 231,700 new jobs with just over half of these being full-time. Despite an increase in the Participation Rate to 65.0, these surge in jobs saw the headline unemployment rate drop to 5.9% (from 6.2%).
Scepticism around the seasonally adjusted numbers should make us turn our attention to the Trend data. Here we see employment up 18,800 for the month. Although this is reasonably healthy jobs growth, it remains the slowest pace of growth this year. Since the start of 2015 the country has added 225,300 jobs to Trend employment. The Trend unemployment rate remains stable at 6.1% (where it has sat for the past 8 months) although, when we look below the rounded number, this actually represents the lowest rate of Trend unemployment since June 2014.
Clearly the labour market at a national level is moving ahead at a far healthier lick than previously recognised and this data certainly validates the RBA’s decision to leave rates unchanged at their meeting on Melbourne Cup Day. It also makes any further cuts much less likely; the futures market is now trading the chance of a 25bps cut in Dec at less than 10%.
In Queensland the story is rather less dramatic. The seasonally adjusted data saw a total of 12,100 jobs added in Oct, although they were almost all part-time (just 100 new full-time positions). Over the course of the past 10 months despite a total of 41,900 new jobs being recorded, only 2,400 of them have been full-time. As was the case at national level, an improvement in the Participation Rate (to 65.7) was no impediment to a decline in the headline unemployment rate; although in QLD’s case this was only a slight decrease to 6.2% (from 6.3%).
The Trend data for QLD shows jobs growth at 4,300, which is a little below the 10 month average through 2015 of 4,740. The Trend unemployment rate remains stable at 6.3%. If we look beyond the rounded first decimal point we see that Trend unemployment is actually at its lowest rate since April 2014. As the second chart below demonstrates, Trend jobs growth in QLD has been running at a pace greater than the expansion of the working population. The labour market has seen some credible improvements in recent months and a continuation at this pace should see the unemployment rate steadily drifting lower.
UPDATE: Gene Tunny at Adept Economics rightly sounds a note of caution on the Queensland data.