Originally published by AMP Capital
- Employment rose by 13,500 in January and unemployment fell to 5.7% from 5.8%, both of which were a little bit better than consensus expectations.
- Full time jobs fell by 44,800, with part time jobs up by 58,300.
While overall jobs growth remains reasonable and unemployment is holding below its 2014-15 high, the quality of jobs growth deteriorated again last month with full time jobs down sharply. This is disappointing as full time jobs growth had started to improve in the previous three months. Over the last year total employment rose by 103,300 but 56,100 full time jobs were lost. The low quality of jobs growth is explaining why underemployment remains high (with labour underutilisation above 14%) and points to continued weak wages growth.
The good news is that our Jobs Leading Indicator (which is based on surveys of job vacancies and employment intentions in the NAB business survey) points to better employment growth ahead. See the next chart.
Overall, the January jobs report is unlikely to move the dial either way in terms of the outlook for interest rates. Solid jobs growth and unemployment remaining well down from its recent highs supports the argument for the RBA to keep interest rates on hold, but the ongoing weakness in full time jobs supports the case for another rate cut to the extent it points to continued weakness in wages growth and hence in inflation.