Australian employment rises sharply in October

The October employment figures showed a superb 178.8 thousand gain, which also stood up to scrutiny when looked at in terms of full-time versus part-time jobs. Full-time jobs grew by 97 thousand, more than the 81.8 thousand part-time jobs, which should help support consumer spending in the months ahead.

This result was all the more impressive as most of the state of Victoria was in lockdown until late October, though there may be some element of back-to-work for previously furloughed workers creeping into these numbers - we won't know for sure until we see next month's numbers.

The linked press release from the Australian Bureau of Statistics shows that the reference period for this survey was the two weeks up to October 10, so before the Victoria lockdown ended. The survey itself was undertaken later in the month though, and some returning-to-work respondents may have given inaccurate responses, even if technically, the end of the Victoria lockdown should not really be a feature until next month.

Employment growth of 2.5% in Victoria did top the table as far as states were concerned (but only just beating the Northern Territories). But it was not a particularly large outlier. Victoria also saw decent hours worked gains of more than 5.5%, which does suggest that something related to the end of the lockdown was taking place, however.

More of this trend presumably beckons when the November figures are released.

The Reserve Bank of Australia typically phrases its analysis of the labour market in terms of the unemployment rate. And here, despite the superb additions to employment, the news was actually negative, with a 0.1pp rise in the unemployment rate to 7.0%. The reason for this can be found in the gender breakdown of the labour report, which shows that female unemployment spiked, mainly it seems, because of a greater number of women looking for (and presumably failing to immediately obtain) part-time work. This was probably the biggest single component of the increase in the labour force and unemployment gains for the month.

On the one hand, this is encouraging, as clearly, households in Australia are not becoming discouraged in their search for work, which indicates that they think their prospects for finding work are reasonable. In the coming months, we suspect many of those failing to find work this month will find their search efforts rewarded, which should bring the unemployment rate down once more. Though this hypothesis clearly rests on how many more people continue to re-enter the labour force in search of work in the months ahead, so the unemployment rate may well flip around for a few months until those trends settle down.

On the other hand, this increase in part-time work search could be interpreted as households failing to make ends meet, which is driving some back into the labour force, and at the moment, it is not clear what the overall conclusion should be. For now, we are inclined to attribute a positive spin to the data.