Rounding out another strong quarter for Australia’s labour market

After two strong reports for July and August, when employment expanded at an average of 28k or 2.9% at an annualised rate, data for September is expected to be on the soft side with only a marginal increase in jobs of around 5k. Still, this would mean that employment in Q3 was up 79k from Q2, equivalent to an annualised rate of 2.4%, and up by 2.0% yoy. This would put the job creation rate substantially above the rate of growth of the population of working age which is currently running at 1.5%. 

Although the strong rate of employment growth is a little puzzling given the sluggish rate of GDP growth (which stood at 2.0% yoy in Q2), historically the coincident correlation between the two is not high. More importantly, the labour market is reflecting the shift away from resource investment to much more labour intensive growth in services and residential construction. 

Despite the modest expected gain in employment, unemployment is expected to have declined again as another bit of the 0.3pp jump in the participation rate of July is unwound - although not quite by a sufficiently large margin to move the unemployment rate from 6.2%. That said, the participation rate remains on a recovery path, which is a further sign of the solid momentum in Australia's labour market.