Q2 Likely To Show Moderate Labour Market Easing

June jobs data print on Thursday and will be watched closely for signs of a pickup in the pace of labour market easing ahead of Q2 CPI due on July 31 and the next RBA meeting on August 6. Even if the unemployment rate prints in line with consensus at 4.1%, the Q2 average will be close to the RBA’s May forecast of 4.0%, but still above Q1. But employment growth is likely to be stronger than the RBA’s 2.1% y/y projection.

• Bloomberg consensus is forecasting a 20k increase in new jobs, slightly below the 3-month average to May. This would result in 97k new jobs in Q2 down from Q1’s 126.3k but above Q4’s 56.2k, so some moderation but still robust.
• Forecasts range from a drop of 20k to a rise of 40k with most estimates between +15k and +30k. CBA is at consensus, but NAB is expecting new jobs to be a bit stronger rising 25k and ANZ & Westpac are at +30k.
• Labour force growth of 3% y/y in May exceeded robust employment growth of 2.5%. This gap has driven the unemployment rate higher rather than job losses. Westpac’s unemployment expectations measure continues to point to jobs becoming harder to find rather than job losses.
• The June unemployment rate is expected to tick up 0.1pp to 4.1%, but forecasts are fairly split between unchanged at 4% and 4.1% with 9 forecasters vs 14 in Bloomberg. Also, three of the four big local banks are projecting it to stay at 4%, with only CBA at 4.1%.
• Only Queensland and NT had school holidays in June (last week only), and so it is unlikely to cause volatility until the July release.