Data Snapshot: Labour Force - Still Waiting For the Slowdown

The key points in this report are:


  • The labour market has once again surprised with its strength, with a gain of 41.1k jobs in July.  The solid increase indicates the labour market is not yet displaying the moderation that has been suggested by other leading indicators of employment. Moreover, it continues to be at odds with the below-trend pace of economic growth. 
  • July’s gain followed a 2.3k decline in June, previously reported as a 0.5k increase. The fall in June was the first decline in employment in nearly three years. Nonetheless, as a trend, employment remains at a solid pace. The three-month average stood at 28.0k. If this rate of growth were to be sustained, it would result in a falling unemployment rate provided the participation rate held steady.
  • The unemployment rate held at 5.2% in July, but we continue to see a risk that the unemployment rate will lift. Leading indicators of employment, including job ads, business conditions, and job vacancies are increasingly pointing to a weaker pace of jobs growth.
  • The workforce participation rate edged up 0.1 percentage points to hit a new record high in July of 66.1%. While a positive development, as it suggests greater productive capacity in the economy, it also lessens upward pressure on wages and inflation.  
  • Today’s data alone does not justify a “need” as yet for a further easing of monetary policy next month. But with the outlook for softer employment growth, low inflation, weak wages growth and growing downside risks from the global economy, we continue to expect the RBA will lower official interest rates again this year, with October the most favoured timing. 


Please see the attached report for more information.




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