Australian jobs & GDP

Great research note by Gareth Aird at Commbank, where he predicts that the unemployment rate in Australia will rise to 4.5% by the end of 2024.

The latest ABS report showed unemployment dropped to 3.7% in February, while the trend remained at 3.8%.

Australian Unemployment Rate

Aird says the sharp rise in employment (green below) in February is at odds with Commonwealth Bank data on the number of salary payments transferred into CBA accounts. The annual percentage change (blue) is declining steeply.

Australia: CBA Salary Payments (Number)

He says that the labor market should not be viewed in isolation but assessed against GDP data. GDP growth is falling and negative per capita GDP growth — indicating a per capita recession in the last three quarters — reinforces that the economy is growing below trend.
Australian Quarterly GDP

It is unusual to have such strong growth in employment in a slowing economy that is running well below trend. But it’s not unprecedented.

However, the trend in employment (blue) is still declining and ABS research (according to Aird) has previously shown that trend data is “superior” to seasonally-adjusted data (red).

Australian Employment Trend

Declining Seek job ads (blue below) since May ’22 also show that the tight labor market is now easing.

Australia: Seek Job Ads


The Australian labor market is expected to weaken in 2024, with the unemployment rate rising.

Poor employment growth is likely to drag GDP growth even lower.

Commbank project three RBA rate cuts of 25 basis points each, commencing in September 2024, based on a deteriorating employment market. Our own view is  less certain, given the potential of higher crude oil prices to increase inflationary pressures and slow RBA monetary easing.