Oz job growth doesn’t convince analysts

Australia’s economy added jobs in December, although not enough to prevent the unemployment rate edging up as participation in the workforce increased.

December’s data caps a volatile year for Australian jobs, as declining participation for much of 2016 signalled more spare capacity than improved hiring figures suggested.

Employment climbed 13,500 from November, when it rose by a revised 37,100; economists forecast a 10,000 gain in December.

The jobless rate increased to 5.8 per cent versus forecast 5.7 per cent.

Participation rate climbed to 64.7 per cent from 64.6 per cent; economists predicted 64.6 per cent.

Full-time jobs increased by 9300; part-time employment rose 4200.

There is some cause for optimism as participation picked up and full-time roles climbed toward the end of the year. Still, the central bank continues to cite uncertainty over the labour market as a key concern in its outlook for growth and inflation.

“The bigger picture is that the labour market still looks fragile,” said Paul Dales, chief Australia and New Zealand economist at Capital Economics. “While the employment figures are moving in the right direction, any further progress this year will be slow rather than spectacular. The fact that the unemployment rate has moved up from the recent lows and is unchanged over the past six to 12 months does break the improving trend that was in play from late 2014 to late 2015,” said Ben Jarman at JPMorgan Chase in Sydney.

“The participation rate is well down over the same period, so the change in trend looks quite fundamental.”

“Overall, unemployment still remains within a wellworn range,” said Michael Turner at Royal Bank of Canada in Sydney.

“With a range of other indicators suggesting hiring intentions remain reasonable, it is hard to conclude that the labour market is deteriorating.”

The bigger picture is that the labour market still looks fragile. While the employment figures are moving in the right direction, any further progress this year will be slow rather than spectacular. Paul Dales, Capital Economics