Australian Markets Weekly: 20 February 2017

One feature of Australia’s recent employment growth has been the subdued pace of full-time job creation at a time when part-time employment has grown strongly

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Full-time jobs growth – should we worry?

  • Full-time jobs growth has slowed since 2013 and the latest employment data reported a loss of 44.8k full-time jobs in January, offset by a 58.3k rise in part-time jobs. While the full/part time split is notoriously volatile on a monthly basis, the trend is worth following as the full-time series historically has had a close relationship with the RBA cash rate.
  • Delving into the ABS detailed quarterly statistics reveals the slowing in full-time jobs growth since 2013 is primarily due to job losses in the mining and manufacturing sectors – likely largely due to the mining investment unwind and structural change in a number of manufacturing areas. This lines up with state employment trends, with full-time job losses concentrated in the mining-dominated states of WA and Qld. More recently though, full-time jobs growth has also reportedly stalled in NSW, while there have been full time job losses in the Wholesale and Retail sectors.
  • Will full-time jobs turn around? SEEK job ads reveal a pick-up in full-time ads in Vic, a stable trend in NSW and signs of stabilisation in WA and Qld. While that overall does not suggest a significant pick-up in the pace of full-time job creation, it also does not suggest further deterioration. Nevertheless, such languid growth in full-time numbers will likely keep the RBA closely focused on the labour market in 2017. The Bank has continually expressed some difficulty in measuring momentum in the labour market.
  • Market focus over the past week has been concentrated on the US where strong economic data helped lift the chances of a Fed rate hike in March to 40% – markets will be looking at Wednesday’s Fed Minutes for any further clues. Domestically, the data focus ramps up with the Wage Price Index Wednesday and key pre-GDP partials of Construction Work Done Wednesday and Capital Expenditure Thursday. There are also a number of RBA events this week, but these are unlikely to add much more given Governor Lowe’s recent speech and the Statement on Monetary Policy.

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