Australia: Jobs surge fails to spark wages or confidence – Westpac

Australia has experienced particularly strong employment growth in 2017 as from a low of 0.9%yr in February 2017, annual employment growth has accelerated to 2.7%yr at August while hours worked have similarly surged, notes the analysis team at Westpac.

Key Quotes

“Interestingly though, the unemployment rate has been broadly unchanged over the past year near 5.6%, pointing to a lingering degree of slack in the labour market.”

“The degree of slack reported by the unemployment rate is nowhere near that suggested by wages, which are broadly unchanged over the past year in real terms despite the strong rally in Australia’s terms of trade.”

“The consequence has been persistent soft consumption growth, as households rely on dissaving to fund spending, and poor consumer confidence. A crucial difference between our 2018 view and that of the RBA is that we believe wage and consumption growth will continue to disappoint, resulting in below trend GDP growth.”