With NAB, Westpac and consensus all at 20,000 and three major banks seeing unemployment at 4.6%, the bar for a surprise sits mainly in the jobless rate. A drop to 4.5% would revive the case for further RBA tightening and could support the Australian dollar and short-dated yields. A rise to 4.7% would push the other way, adding weight to the view that four hikes are already doing enough. NAB’s view that the cooling is supply-led also matters for rates: rising labour force participation eases wage pressure without signalling a hiring slump, which gives the RBA less reason to sound alarmed about growth.
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NAB thinks August’s jobless jump was partly a statistical quirk, but not enough of one to drag the rate back to 4.5% this month.
Summary:
- Australia’s September labour force data are due at 11.30am Sydney time Thursday (0030 GMT Thursday, 8.30pm US Eastern Wednesday)
- NAB forecasts employment up 20,000, matching Westpac and consensus, with CBA lower at about 10,000
- NAB sees unemployment holding at 4.6%, with some risk of a lower reading
- That would sit marginally above the RBA’s 4.5% fourth-quarter forecast, which NAB says would not materially change the central bank’s assessment unless unemployment keeps surprising higher
- NAB said August’s jump looked partly due to residual seasonality and ABS methodology changes, raising the prospect of some payback
- A low-unemployment survey group rotating out, and rounding, keep NAB from making 4.5% its base case
National Australia Bank expects Australia’s September labour force figures to show employment rising by 20,000 and the unemployment rate holding at 4.6%, with some risk of a lower reading. The data are due at 11.30am Sydney time on Thursday, which is 0030 GMT and 8.30pm US Eastern time on Wednesday.
NAB’s forecast matches Westpac’s and the market consensus. CBA expects a softer gain of about 10,000. All three banks see unemployment unchanged.
A 4.6% reading would leave the jobless rate slightly above the 4.5% fourth-quarter projection in the Reserve Bank of Australia’s August Statement on Monetary Policy, its quarterly economic outlook. NAB does not expect that gap to materially shift the RBA’s view of the labour market unless unemployment keeps surprising higher through to year-end. The bank said much of the recent cooling reflects more people entering the workforce rather than weaker hiring, and that indicators of labour demand remain resilient.
NAB said August’s jump in unemployment appeared partly due to residual seasonality and partly due to methodology changes. Residual seasonality refers to seasonal patterns that the adjustment process did not fully strip out. The methodology changes were made under the Australian Bureau of Statistics’ Labour Force Modernisation project. Together, these raise the prospect of some payback this month.
Two factors stop NAB from making a 4.5% print its base case. First, the eighth of the survey sample rotating out this month has an unusually low unemployment rate, so its departure tends to push the measured rate higher. Second, August’s rate was about 4.65% before rounding. It could therefore fall almost a full tenth of a percentage point and still be reported as 4.6%.
The result feeds directly into the debate over whether the RBA, having lifted its cash rate four times to 4.60%, needs to go further. On NAB’s reading, a steady 4.6% would not be enough to shift that assessment. A run of upside surprises in unemployment through to year-end would be.
This article was written by Eamonn Sheridan at investinglive.com.