Jobs data shows Delta’s end

The ABS’s weekly payrolls data shows an increase in employment in NSW (0.9%), the ACT (0.9%) and flat Victorian jobs (+0.01%) over the prior fortnight. This pulled national employment up 20bps over the fortnight.

Normally I’d say that it’s too early to call, as this data is heavily revised. However revisions are typically to the upside (late returns tend to improve the estimate) so I think it fair to say that the corner has been turned on employment. The Delta-lockdown induced dip of employment is very likely behind us.

The non-Delta states continue to look pretty good, for the most part. Strength here, despite weakness in the larger states, will give the RBA confidence about the post-lockdown bounce. The data is going to be roaring when the RBA makes the next QE decision at their February meeting. A 2bn taper to 2bn per week seems like a lock.

Another thing the data does is confirm the RBA’s liaison-feedback that firms were preparing for the end of lockdown. Employment seems to have started to pick up in anticipation of re-opening (NSW lockdown began easing in October):

Information from the Bank’s liaison program indicated that many firms were preparing for the lifting of restrictions, and timely indicators of household spending and hiring intentions suggested the recovery in activity and employment would be well under way by the end of the year. 

October 2021 RBA Minutes, published 19 October 2021 (my emphasis)

The market may take it in a hawkish way (sure, good news is good news), but the accuracy of liaison on this front will make the RBA more confident about the feedback from liaison regarding the lack of wage pressure.

Overall, there were few indications from disaggregated wages data or from the Bank’s liaison program to suggest that aggregate wages growth was likely to accelerate sharply in the period ahead.

October 2021 RBA Minutes, published 19 October 2021 (my emphasis)

It’s no wonder that firms are moving early to lock in labour given that the difficulty finding suitable labour (according to the Q3 NAB survey, also released today) remains around series highs, despite the job-apparent job-shedding due to the lockdowns. My guess is that few people were let go this time around.

At some point this will become wage pressure, but my hunch is that it’ll take time as the prior period of low inflation has lowered inflation expectations.

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