Thursday, 11th November, 2021
We have long been inured to labour market data surprises – particularly during the pandemic. Yet, the figures last Wednesday showing a plunge in the unemployment rate to 3.4% were still eyebrow-raising. Employment rose 2% over the quarter as well. The labour market was absolutely on fire before the mid-August jump up in alert levels occurred. Although job losses have likely mounted as strict restrictions remain in some parts of the country and unemployment is likely to lift over the December quarter, we expect unemployment rate will then fall back to remain comfortably below 4% over 2022. Wage growth will continue to pick up, reinforcing that inflation pressures will be prolonged.