This note just dropped from RBC Capital Markets.
The seasonally adjusted November data are mixed with enough in there for everyone, sprinkled with some of the usual monthly volatility.
Taking a step back, the message largely remains the same. This is a labour market which continues to ease gently but remains healthy by historical standards and likely still slightly tight.
Participation and emp/population rates continue to moderate but are still pretty elevated, underutilisation is rising but well below the long-run average and, in trend terms, there remains ongoing monthly job generation.
The labour market narrative is, perhaps, best captured by the gentle lift in underutilisation, which is a better measure of labour supply than just the unemployment rate.
It suggests a little more capacity in the labour market, which is helpful given ongoing demand for labour and the strength in the broader measures of earnings, labour costs and compensation at a time [when] core inflation is running above the ceiling of the RBA’s 2-3% target.
With ongoing labour force supply and some moderation in trend employment growth, we continue to expect the UR to move to the top of a 4.25%-4.5% range for much of 2026 and likely test a little above that at times.
Even with higher underemployment, this may not be enough to materially temper labour costs/compensation and unless productivity picks up on a sustained basis, this will continue to challenge the return to sustainable within target mid-point inflation.
November CPI on 7 Jan and Q4 CPI on 28 Jan look set to take centre stage.