The Dec labour market report is a mixed bag. The unemployment rate held steady at 5.2% (November was revised down to 5.2%), however the steady unemployment rate was due to a 30bps drop in the participation rate (to 65.2%). Employment fell by 29.3k, with a 24.5k increase in full time jobs offset by a 53.8k drop in part time jobs. Total hours worked rose by 5.6m to 1662m.
My guess is that seasonals play a big part in this report. The changing pattern of retail demand – and hence seasonal christmas hiring – means that the seasonal factors were ‘expecting’ an increase in part time hiring and the participation rate. This didn’t occur – we are now doing more of our seasonal shopping online, so there is less seasonal demand for labour.
The kids who were on holidays with their family and friends would not have reported as unemployed – hence the steady unemployment rate and drop in the participation rate.
Zooming out, the only thing that this survey is really designed to do is to measure the unemployment rate. That has been steady at around 5.25% for a while now.
Though the data quality is poorer as we split the sample, it is probably worth doing so in the case of the male full time unemployment rate. The world being what it is, the male full time unemployment rate is still the most economically significant sub-component.
This rate fell 10bps to 4.7% in December. It is down 40bps from a peak of 5.1% in August.
On balance, the Australian labour market is steady – with early hints of firming.
This report neither makes nor breaks the case for a Feb cut – we will have to wait and see Q4’11 CPI (out 25 Jan) to see about that.