Australia: Unemployment rate to round up to 5.7% in August - Westpac

Analysts at Westpac expect the Australian participation rate to round down to 65.1% in August, which will see the unemployment rate to round up to 5.7%.

Key Quotes

“In July, unemployment fell 0.1ppt to 5.6% (June was revised up to 5.7%) as the participation rate nudged up 0.1ppt to 65.1% driving a rise in the labour force. At two decimal places the unemployment rate was 5.65%.”

“By state, Qld was the main source of the gain in total employment (27.0k) with the rest soft or mixed (NSW +0.5k, Vic –2.2k, SA +0.8k and WA –1.3k). Unemployment rose in NSW (5.0%) and Vic (6.1%) while it fell in Qld (6.2%), SA (6.2%) and WA (5.4%).”

“Participation has lifted since the Oct 2016 low of 64.8 and is getting back towards the recent high of 65.2% seen in Nov 2015. We expect the solid employment outcomes to continue to drag the participation rate higher over time but in Aug it will round down to 65.1%. This will see the unemployment rate to round up to 5.7%.”

“Total employment rose 27.9k in Jul. The Australian labour market went through a soft patch in 2016, particularly from Aug to Nov but it saw a solid uplift as we moved through 2017. The annual pace accelerated from 0.9%yr in Feb to 2.0%yr in May where it held that pace through Jun and July. In the year to Feb total employment grew 106.8k; that has since lifted to 239.3k in the year to Jul.” 

“Full-time employment fell 20.3k in Jul following a 69.3k surge in Jun and a solid 53.9k gain in May. Over the year full-time employment gained 197.7k/2.4%yr. Part-time employment rose 48.2k following a 49.3k contraction in June and –14.3k in May. In the year to July, part-time rose 41.6k/1.1%yr.”

“The current momentum looks set to continue into 2018 with our Jobs Index pointing annual employment growth of around 2¾%yr by end 2017 to early 2018. As such we are looking for current momentum to hold with a 20k forecast for August lifting the annual pace to 2.3%yr.”