Westpac Labour Force preview:
Last: 25.7k, WBC f/c: 10k, Mkt f/c: 15k, Range: 1k to 29k
Total employment rose 25.7k in March, stronger than the market median estimate of 15k. The three month average is now 23.7k, from 21.8k in February, indicative of a robust trend in the labour market so far in 2019. In the year to March employment has lifted 305k or 2.4%.
In the year employment has grown 129.7k in NSW compared to a slightly smaller 122.7k gain in Victoria. With the recent tick-up in unemployment in both NSW and Victoria, the ABS now reports a 0.6ppt fall in unemployment in the year for both states, but NSW is at a national low of 4.3% and Victoria is 4.6%.
The April and May we have seen weakness emerge in the various business surveys. First it was the AI Group surveys with our AI Group Employment Composite Index falling from 51.8 in March to 45.4 in April, the lowest read from this index since June 2013. Then the NAB monthly employment index fell in April dragging down our NAB Composite Employment Index to 51.4 from 53.4, the lowest read since September 2016.
As the business surveys have deteriorated our Jobs Index has turned down and is now suggesting that employment growth should slow to around 2%yr in Q3. But before we get too negative on employment the Westpac Melbourne Institute Unemployment Expectation Index fell 5.1% in May following a 2.5% fall in April. Remember, falling unemployment expectations is a sign households think the labour market is improving.
Westpac’s forecast for the April Labour Force total employment of +10k will generate a 2.5%yr annual pace so we are looking for further weakness to unfold in the months ahead.
Last: 5.0%, WBC f/c: 5.1%, Mkt f/c: 5.0%, Range: 4.9% to 5.1%
In March, the participation rate lifted from 65.58% to 65.66% driving a 42.7k gain in the labour force. The labour force has grown at a 2.0% pace in the year to March compared to the 2.4%yr gain in employment hence the drift down in employment through the last year.
As total employment rose by a smaller 25.7k in March, the unemployment rate drifted higher, from 4.9% to 5.0% (4.94% to 5.05% at two decimal places so a whisker away from rounding to 5.1%).
With our forecast for +10k rise in employment, if we hold the participation rate flat at 65.7% then we get a 17.8k rise in the labour force lifting the unemployment rate to 5.1% from 5.0%.
Male participation has level out over the last few months but can still be described in a downtrend. Female participation has levelled out of late, but is still in a longer-run uptrend.