Australian unemployment rate likely to trend lower over next few months, remain supportive of wage growth recovery

Australia’s unemployment rate is expected to trend lower over the next few months, which should help to support an eventual recovery in wage growth, according to a recent report from ANZ Research.

Looking at the country’s December employment report, we see that the labor market clearly remains in great shape, with another strong gain in employment in December confirming that underlying momentum in the economy remains solid. Encouragingly, the rise in the participation rate to a near record high suggests that the strength of the labor market is pulling more workers back into the labor force.

Employment rose a strong 35k in December, following the upwardly revised 64k rise in November. This is the fifteenth straight monthly rise in employment, a feat which has only occurred once before in the history of the monthly labor force numbers. Full-time employment was solid with a rise of 15k, while part-time jobs rose 20k. Hours worked ticked lower by 0.2 percent m/m, but are still running 3.2 percent above a year ago levels.

The strength was concentrated in NSW (+14k), with Western Australia also posting a solid gain (+6k). Employment fell in both Victoria (-4k) and Queensland (-4k). 

"While the strong gains in employment and participation continue to suggest that the economy is in good shape, we remain of the view that there has been some overshoot in the jobs numbers recently and look for more moderate gains in the months ahead," the report commented. 

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