Employment Not Expected To Unwind December Losses

January labour market data print on Thursday and given December’s large 65.1k drop, attention will be on whether labour demand is still strong enough to unwind most of that move. Bloomberg consensus is forecasting a 25k rise in new jobs with the unemployment rate ticking up 0.1pp to 4%. The latter hasn’t started with a ‘4’ since February 2022.

• The 3-month average of job gains to December is 17.2k. The consensus forecast would lower the 3-month average to 10.8k. The January forecast is above the 6-month average of 20.7k.
• December was likely impacted by holidays as they can affect when people change jobs and take time off. The labour force fell 0.4% m/m despite working-age population growth running around 3% y/y. As a result, the participation rate dropped 0.5pp but consensus only expects it to rise 0.1pp in January. There is a risk that the rebound could be larger.
• There is a wide range of employment forecasts from +10k to +55k with most 15k-40k. Westpac is below consensus at +15k, ANZ is in line with +25k, whereas NAB and CBA are above expecting 30k and 40k respectively.
• The unemployment rate is projected to be between 3.8% and 4.1% with CBA, NAB and Westpac all at the 4% consensus while ANZ expects no change at 3.9%.