ONLY CHARTS #148

Aus labour market, Aus immigration

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1. Australia’s unemployment rate rose +0.1ppts to 4.2% in July. That occurred alongside a sharp rise in employment (+58k m/m), taking the employment-to-population ratio 0.1ppts higher to 64.3%.

Australia’s unemployment rate is tracking broadly in line with, or maybe very slightly higher than, the RBA’s latest forecasts.

The increase in Australia’s unemployment rate over the past couple of years alongside a broadly unchanged employment-to-population ratio is very unusual. The difference this time is a rising participation rate which typically declines when labour market conditions soften.

The RBA has been toying with the possibility that past upside inflation surprises may have reflected somewhat weaker supply than previously thought.

While there are many moving parts, the ongoing strong rising trend in labour force participation provides some push back on that hypothesis. (Of course, it could be that the quality of labour - or matching with jobs - is an emerging issue rather than the quantity.)

2. The resilience of Australia’s labour market continues to stand out among peer economies. Employment-to-population ratios are falling elsewhere at varying degrees, and unemployment rates typically rising more quickly than in Australia.