Australia’s jobs report for July will be released by the ABS at 11:30am AEST.
Jobs data remains one of the most important releases on the economic calendar, and has become an increasingly important barometer for Australia’s economic outlook.
Today’s report follows quarterly wage data released yesterday. While there was a faint hint of upward pressure on private sector wages, the view of most economists was that a material lift in wage growth remains a long way off.
In view of that, the RBA is relying on continued strength in Australia’s labour market to provide a catalyst for an eventual uplift in wages.
Strong jobs creation is also essential for economic growth and domestic consumption, particularly given the ongoing downturn in Australia’s housing market.
Here’s the state of play ahead of today’s release:
The median forecast among economists is for employment to rise by 15,000.
That will leave the unemployment rate steady at 5.4%, given the expectation that labour force participation will remain at 65.7%.
Of the 21 economists polled by Bloomberg, forecasts ranged from a gain of 30,000 jobs to a fall of 22,000.
In June, Australia’s jobs numbers smashed expectations with a huge increase of 50,900, against a forecast rise of 16,500.
The unemployment rate remained at 5.4% due to a lift in the participation rate, from 65.5% to 65.7%.
Last month’s gain was driven by a sharp lift in full-time employment, which rose by 41,200. Part time employment rose by 9,700.
Reflecting those trends, total hours worked increased by 10.7 million hours, or 0.6%, reversing the previous month’s falls.
Over the past year, full-time employment increased by 158,200, outpaced by a 180,800 lift in part-time employment.
The June result left total employment in Australia at 12.573 million, the highest level on record.
Despite the sharp lift in June, analysts at Macquarie picked out some odd trends in the data which cast some doubt on the statistical veracity of the result.
While Australia’s economy continues to add jobs, the level of underutilisation — unemployed people plus those in work who would like more hours — remains high.
For wage growth to increase in a meaningful manner, this excess amount of underutilised workers needs to fall.
With no underemployment or underutilisation figures contained in today’s report, markets will look to the unemployment rate to gauge whether any further progress has been made on reducing the number of underutilised workers. The split between full and part-time employment, as well as total hours worked, will also be watched closely.
Of note, the split between full and part-time employment growth has reversed the prior months moves in recent reports. If that pattern is maintained, it hints that full-time hiring may may while part-time employment will increase.
The RBA remains optimistic on the outlook for the jobs market, citing high job vacancy rates and other positive leading indicators.
In its latest set of economic projections released last week, the RBA said it expects the unemployment rate to fall to 5% by December 2020.
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