Aus macro/Wages/Employment

Returning from travel, so coming back to this wages and employment print from last week.

The headline employment change print looks good, 55K jobs in the month. Almost all of this was part time work. I don’t think that’s quite as strong as the market took it to be. Full time work is the clear vote of confidence. Part time is still better than temporary help, but I think the difference matters.

The strong wages outcome, QoQ, reflects the award wages changes coming through. I think we can look past that as non recurring.

The higher participation rate is good, hopefully the higher wages are drawing in more people from the sidelines. It is also possible that higher inflation (cost of living) and higher mortgage rates have made it harder to stay out of the work force (e.g. 2 incomes needed to make things work).

The unemployment rate moving up (3.72%) is also notable.

Since the “turn is on” for unemployment globally (look at NZ!) I think we should see it as an early warning that tighter rates are doing their job, and that the risk of overshoot is real.

Note the debt service ratio data below. Things are tough out there. It is the key reason we are underweight Australian shares in our multi-asset portfolios.

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