Originally published by AMP Capital
- Australian employment rose by 27,900 in July or 2% year on year which was a bit better than market expectations for a 20,000 gain.
- Unemployment also remained at 5.6%, although July was revised from 5.6% to 5.7%
- However, the composition of jobs growth was poor with a loss of 20,300 full time jobs and a gain of 48,200 part time jobs.
- Reflecting this total hours worked fell 0.8%, although it’s still up 1.9% year on year.
- Annual jobs growth is strongest in Tasmania (+3.9% yoy), followed by Victoria (+2.8%), Queensland (+2.7%), WA (+1.9%), SA (+1.5%) and NSW has slipped to just 1.2%. ACT is +0.6% and NT is -0.4%
Implications
While the composition of jobs growth was poor in July it’s too early to tell whether the improvement in the relative performance of full time jobs growth seen since February has come to an end or not. More broadly jobs growth remains a bright spot in the economy and leading labour market indicators (job ads, job vacancies and hiring plans) continue to point to solid jobs growth ahead. See the next chart.
Hopefully, the strength in employment growth will lead to stronger jobs growth and this will boost consumer confidence and support consumer spending. But as yet there is little evidence of this and with the boost to growth from housing construction set to reverse, underlying inflation remaining below target and a rising Australian dollar threatening lower growth and inflation it remains best for the RBA to keep interest rates unchanged at 1.5%. (Thanks partly to the political mayhem in the US, which makes ours look trivial, the Australian dollar looks a bit like it may have another go above $US0.80.)