Australian employment rises strongly in December, unemployment to trend lower in months ahead

The Australian labor market continues to be strong, with another solid rise in employment seen in December affirming that underlying momentum in the economy stays strong. Employment grew 35k in December, after an upwardly revised 64k rise in November. This is the fifteenth consecutive monthly rise in employment.

Full-employment rose strongly by 15k, whereas part-time jobs were up 20k. Hours worked dropped 0.2 percent sequentially, but continue to be 3.2 percent above year ago levels. The strength was mainly seen in NSW, with Western Australia also recording a strong rise. Employment dropped in both Victoria and Queensland.

In spite of the solid rise in jobs, the jobless rate rose to 5.5 percent along with another sharp rise in the participation rate to 65.7 percent, the second highest level on record. Both male and female participation rose strongly, with female participation reaching a new record high. This implies that the strength in employment is drawing more people into the jobs market. This will underpin nation-wide household income, but it also implies that it might take longer for labor market spare capacity to be eroded and average wage growth to recover.

“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”,  stated ANZ.

However, a number of measures imply that unemployment will trend lower in the coming months, which should aid in supporting an eventual rebound in wage growth.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was neutral -21.5155, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -14.573. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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