In Australia employment rose a very strong 54,600 in November – full-time employment rose 55.1k, while part-time employment fell 400k. The annual pace of growth in employment has risen to 3.7%yoy, up from 3.4% in October. The unemployment rate fell to 5.2% from 5.4%, despite the participation rate rising to a new record 66.1% from 65.9% – see graph below.
However these positive figures for unemployment follow on from weak GDP data earlier this month – so how can you have weaker growth but lower unemployment? With most economies there is a lag of about a quarter (3 months) between changes in the output of the economy (GDP) and changes in employment. That’s because it takes a while for employers to respond to sustained changes in output by either hiring more workers, in an upturn, or letting their workforce decline, in a downturn.
According to the National Australia Bank it is too early for the slowing in output registered in the GDP release to show up in weaker job creation. However, a slowing in employment can be expected ahead.