Australia’s total employment falls in January, raises concerns of job market recovery

Australia's total employment on seasonally adjusted terms fell 0.07% m/m in January, after a nearly flat reading in December. The biggest fall in employment was seen in New South Wales, where it fell by 13.4k or 0.35% m/m sa. New South Wales had recorded certain employment growth due to a refreshing of the survey sample. The drop in employment comes after notably evaluated monthly increase that averaged +44.0k in 4Q15.

However, the jobs report's composition raises certain concern as full-time employment declined by 41,000, whereas part-time jobs grew by 33k. Meanwhile, the unemployment rate increased to 6% on seasonally adjusted basis, as compared with consensus expectation of 5.8%, from 5.8% in December. The labor force increased 22.3k, while the participation rate remained the same at 65.2%.

The job growth was weaker than expected and raises certain threat regarding the underlying strength of the job market rebound. However, it becomes more difficult to assess the trend with extreme monthly volatility and technical factors. The forward looking information gives a mixed signal. On one side, the NAB business survey's employment category implies that January's job market strength eased, with index dropping into the negative territory for the first time.

However, the ANZ job advertisement data implies that job openings continue to be supportive of the labor market, whereas the NAB business survey indicates towards a capital utilisation recovery from December weakness. Even though the labor market is expected to continue on a rebounding trend, the data for January raises doubt if the growth momentum is strong as expected earlier.