Australia: Unemployment likely to stay at 5.6% - Westpac

In view of analysts at Westpac, for July, strong Australian employment should again be associated with higher participation and at 65.1% participation should lift the labour force enough to hold unemployment at 5.6%.

Key Quotes

“May and June were robust updates from the Labour Force survey. The recovery in employment was something that our Jobs Index had been pointing to for some time and our employment forecasts going forward incorporated on–going strength at least to year end.”

“Total employment rose 14k in June compared to the market’s forecast of 15k. Full–time employment surged 62.0k following on from a 53.4k gain in May. In the year full–time employment gained 175.4k/2.1%. Part–time employment fell 48k following a –15.4k in May. In the year part–time employment lifted 64.8k/1.7%, slower than full–time employment for the first time since Mar 2015.”

“Employment is now running on par with our Jobs Index which is pointing to it accelerating as we near year end. Our forecast for 35k will hold the annual pace at 2.0%yr.”

“The solid June gain in employment was matched by a 0.1ppt lift in participation. This led to a 27.1k gain in the labour force thus holding the unemployment rate flat at 5.6%. However, at two decimal places the unemployment rate was 5.65% up almost 0.1ppt from 5.56% in May so it was a very small smidgen off being rounded up to 5.7%.”

“We believe we have seen the low in unemployment and expect it to hold around 5.6% until it starts to drift higher as we move into 2018. Robust employment growth is drawing workers back into the labour force (and/or holding more in the labour force), lifting participation and preventing any near term dip in unemployment.”