A soft jobs print would reinforce the Reserve Bank of Australia’s view that the labour market is gradually cooling, supporting the case for a pause or a slower pace of further rate hikes and likely weighing on the Australian dollar. A stronger-than-expected outcome, closer to Westpac’s forecast, would complicate that narrative and could see markets price in a higher chance of further tightening. CBA’s view that unemployment climbs toward a 4.7% peak by late 2027 points to a multi-year softening path rather than an abrupt shift, meaning today’s single data point carries less weight for the RBA’s rate trajectory than the underlying trend across coming months. Traders will likely focus most closely on the participation rate as a cleaner read on underlying momentum, given both banks flag population-related noise in the headline employment figure.
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Earlier:
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Westpac sees a modest hiring gain in July while CBA expects a flat print, with both banks agreeing June’s surprise jobs surge likely overstated the true pace of labour market momentum.
Summary:
- June employment jumped 76.3k, a sharp swing after April’s 38.6k fall and May’s 44.0k rise
- Three month average employment growth is running at an annualised 1.1%, below the long run average of 1.9% and working age population growth of 1.8%
- Participation rate rose 0.3 percentage points to 67.0% in June, while unemployment held at 4.4%
- Westpac forecasts July employment up 15k, with participation easing to 66.9% and unemployment steady at 4.4%
- CBA forecasts flat July employment, participation slipping to 66.9% and unemployment holding at 4.4%
- CBA sees no sign of reacceleration in its internal data or in employment intention surveys, and expects unemployment to peak at 4.7% in late 2027
Australia’s labour market faces a fresh test today with the release of July employment figures, and two of the country’s major banks have offered contrasting previews of what to expect after a volatile run of prior readings.
Westpac and Commonwealth Bank of Australia (CBA) both point to June’s surprise 76.3k jump in employment as an outlier that followed a choppy stretch, with April recording a 38.6k decline and May a more modest 44.0k gain. The swings have made it harder to read the underlying trend, and the two banks have landed in different places on what July will show.
Westpac has pencilled in a further 15k rise in employment, while flagging that the participation rate may be a cleaner signal on the day given it is subject to less noise from population estimates. The bank expects participation to ease slightly to 66.9% from June’s 67.0%, with the unemployment rate holding broadly steady at 4.4%. Westpac noted that some of June’s strength reflected people who already had a job lined up in May finally starting work and entering the labour force in June, a pattern the Australian Bureau of Statistics itself highlighted. The bank also flagged a recent sharp rise in underemployment as a possible early signal of more slack building in the market.
CBA takes a more cautious view, forecasting flat employment for July and warning that Census-related workforce effects could add noise to hours worked in the release. The bank argues June’s 76.3k surge and the accompanying jump in participation likely overstated genuine labour market momentum, pointing to survey volatility as the driver. CBA said its own internal data show no evidence of a material reacceleration in hiring, while employment intention surveys continue to point to softer conditions ahead. The bank expects participation to dip to 66.9% and unemployment to hold at 4.4% in the July print.
Looking further out, CBA expects slower economic growth to gradually push the unemployment rate higher, with a peak of 4.7% forecast for late 2027. That would align with the Reserve Bank of Australia’s own expectation of a gradually cooling labour market, even as the near-term monthly figures continue to whipsaw. Today’s data will offer the first indication of whether June’s strength carries through or proves to be another one-off in an increasingly noisy series.
0130 GMT is 11.30 am local time in Sdyeny and 2130 US Eastern time.
This article was written by Eamonn Sheridan at investinglive.com.