Australia: Another +30k lift in employment? - TDS

Thursday’s June employment report for Australia could be the marquee event for the markets this week as after +141k jobs were added in the last three months alone (80% being full-time) consensus is not convinced that this strong momentum can continue, points out the analysis team at TDS. In contrast, TD expects another +30k lift in employment (top of the market) while market analysts are clustered around three scenarios of +5k, +15k and +20k.

Key Quotes

“We expect a fourth consecutive strong employment report due to three reasons (1) leading indicators ANZ and skilled job vacancies suggest further strength, and we highlight the strong guidance from the NAB net balance of the employment sub-component; (2) in-house seasonal analysis suggests another strong “raw” increase in employment is likely, leading to a higher seasonally adjusted print (what has occurred over the last three months, middle chart); and (3) the ABS claim that there is a favourable slant towards full-time employment in the incoming vs outgoing household sample.”

“Even with a ‘surprise’ +30k, we see the ‘encouraged worker effect’ boosting the participation rate further to 65%, an 18- month high, which in turn lifts the unemployment rate from 5.5% to 5.6% (mkt 5.6%). The markets assume that the participation rate remains at 64.9%.”