Aus macro/employment

The Aussie employment data remains consistent with an economy that has moved substantively back into balance, with regard to the labour market.

The unemployment rate has firmly turned, from a low in the 3.4-3.5%, to a little above 4% now (dramatically rounded up to 4.1%, but it was only 4.05% at the second dp) and the employment growth itself was entirely comprised of part time workers (+44.66K, vs -6.1K full time).

The participation rate remains elevated at 66.7%, and whilst immigration and resultant population growth is very strong, it’s clear that the net impact is an increase in the supply of labour that that is outstripping the demand for said labour, which is why the unemployment rate is going up.

Now immigration is procyclical, people come when there’s the jobs, so whilst there’s all sorts of conversations about immigration caps and the like, the reality is those numbers will drop if jobs are proving harder to come by.

I would suggest with employment data like that of the above, combined with the job vacancies data, we can be reasonably sure wages growth will continue to slow.

Whilst equities are strong at present, we use the above to suggest caution within the Aussie equities market is warranted, particularly those sectors at the “pointy” end of the cycle (banks, builders, consumer discretionary).

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