Australia's jobless rate held at a three-year trough of 5.6 percent in October but employment rebounded only modestly from a sharp fall the previous month, a mixed report that did little to alter the outlook for steady interest rates. Thursday's data from the Australian Bureau of Statistics showed employment rose a net 9,800 in October, below forecasts of a 20,000 gain. September's report was also revised downward to show a drop of 29,000.
Full-time jobs did bounce by 41,500 in October, but that followed a huge drop of 74,300 the previous month and extended a trend toward part-time work that has bedevilled the labour market all year. "There is still a tilt towards part-time employment from full-time employment. That suggests a softer underbelly in the jobs market," said David De Garis, a Melbourne-based senior economist at National Australia Bank.
"It's certainly a lot less vibrant than it was. That means the Reserve Bank will remain alert to what's happening." Market reaction was still minimal as the Reserve Bank of Australia (RBA) has recently signalled interest rates were firmly on hold after cuts in August and May. Interbank futures imply just a 20 percent probability of an easing next year, while the local dollar was little changed at $0.7480.
The ABS recently released a much broader survey of labour trends that showed the underemployed numbered no less than one million, of whom 945,400 worked part-time. That was out of a total labour force of 12.6 million. The long-running shift to part-time work was no respecter of qualifications either. Of the underemployed part-time workers, 551,700 had a non-school qualification and 37 percent of those held a bachelor degree or higher.
On average the underemployed wanted to work an extra 13.5 hours per week, suggesting the economy could absorb over 13 million more hours a week of work before getting anywhere near the inflationary zone of full employment. Instead, the falling share of full-time jobs was putting downward pressure on wages, and thus inflation. Figures out this week showed wage growth slowed to a record low of 1.9 percent in the year to September, sapping consumer spending power.
"An uncomfortably high level of labour underutilisation and elevated job security fears mean workers are reluctant to push for wage increases," said Kristina Clifton, an economist at CBA. "We don't see enough strength in the labour market to push wages and inflation higher," she added. "As such we think there may be more policy easing ahead in 2017."