RBA shifts reaction function to underutilisation

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Via UBS:

Aug jobs boom 54k, surging 2.7% y/y (best since 2015), driven by full-time Employment boomed in Aug-17, up a far stronger than expected 54k m/m (UBS: +10k, mkt: +20k), the most since Mar-17, after +29k in Jul-17 (was +28k). The y/y jumped to 2.7%, the best since 2015, albeit ~consistent with stronger lead indicators. Across the major States, y/y jobs is now strongest in QLD (4.1%) & then Victoria (3.1%), with a further recovery in WA (2.5%) & NSW (1.9%). Overall, the details were stronger m/m. Full-time rebounded after retracing (+40k after -20k), lifting to 3.1% y/y, the best since 2011; & part-time also gained (+14k after +49k), picking up to 2.0% y/y. Hence, hours worked bounced (0.4% m/m, 2.6% y/y), but with Q3 quarter to date still up only 0.3% q/q (and after a 1.3% q/q jump in Q2 did not translate to income in the GDP data).

Unemployment rate held as 5.6% as expected, to now be on a ~flat trend Despite much stronger jobs growth, the unemployment rate held at 5.6% as expected for a 3rd month (UBS & mkt: 5.6%) – to be on a ~steady trend – given the participation rate lifted again to 65.3%, the equal highest since 2011 (after 65.1% in Jul-17).

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.