There are improving signs in the Australian employment market, particularly for Victoria as it comes out of its tough COVID-19 restrictions.
But that won’t stop the jobless rate rising just yet as more people rejoin the market seeking work.
Still, further positive news on the prospect of a coronavirus vaccine has seen consumer confidence jump to a nine-month high, a potential bonus for retailers heading into Christmas.
Australian Bureau of Statistics data shows payroll jobs grew 0.5 per cent nationally over the fortnight to October 31 and by one per cent in Victoria.
RBC Capital Markets head of strategy Su-Lin Ong expects the more substantial relaxation of Victoria restrictions from early November will lend further support to the payrolls data in the coming months.
“In addition, the likely lift in business confidence recently … further fiscal and monetary stimulus plus encouraging vaccine news should also be supportive,” Ms Ong said.
Nationally, payroll jobs remain three per cent lower than mid-March, when the impact of the pandemic was first felt, and by six per cent in Victoria.
The payrolls series was introduced by the ABS to give a more frequent assessment of the labour market during the pandemic.
The full labour force report for October is released on Thursday. It is expected to show a 30,000 drop in the number of people employed and a rise in the unemployment rate to 7.1 per cent from 6.9 per cent in September.
The Reserve Bank’s cautious base case is that unemployment peaks at a little below eight per cent by the end of the year.
The minutes of its interest rate-cutting November board meeting note there is a high degree of uncertainty around unemployment in the coming months as Victorian restrictions ease but temporary support policies for the labour market are adjusted or expire.
The board concluded that it was the appropriate time to introduce another monetary policy package, which included cutting the rates of key measures and introducing a $100 billion bond buying program.
“It had become clearer that unemployment would remain high and inflation subdued for an extended period, and that further information in coming months was unlikely to change that assessment,” the minutes released on Tuesday say.
But Reserve Bank governor Philip Lowe believes it is possible the Australian economy could perform better than the central bank is predicting if there is good news on the vaccine front.
“If we do get further good news on the health front, we could have a rapid rebound,” he said in a speech on Monday night.
Consumers seem to agree.
The weekly ANZ-Roy Morgan consumer confidence index has risen a further 3.4 per cent, building on a 3.2 per cent gain in the previous week, reaching its highest level since February.
The index has climbed for 11 weeks in a row.
“The news about the successful vaccine trial no doubt played a major role,” ANZ economist David Plank said.
“The strong result points to a potentially strong Christmas season ahead for retailers.”
Last week, pharmaceutical giant Pfizer said it was having ongoing successes developing a vaccine, which has a 90 per cent effectiveness.
On Monday, rival Moderna said trials of its vaccine showed a 95 per cent efficacy.