The Big 4 Ahead Of January Labour Market Data

Below are snippets from the big 4 banks' labour market data previews:

• ANZ: We expect a rise of 20K m/m. Some workers may have been laid off if their employers had to reduce operations or shut down, and some may have left jobs, for example, to care for family. But we think most businesses expected the Omicron wave to be pass and held onto workers and that some have had to hire additional people to cover workers who were sick or in isolation. If employment did fall in January, we think the decline will have been small and short-lived. We expect a fall to 4.0% from 4.2%. Changes in employment, participation and population growth will all influence the result, the latter of which should have started to pick up a little as Australia’s international border started to reopen in December. If we’re right about a small rise in employment and slight fall in participation, this would be enough for the unemployment rate to decline.
• CBA: We expect employment rose by 45k in January and the unemployment rate improved further to 4%, even as the participation rate is expected to have lifted a touch. If our forecasts prove true and the unemployment rate prints at 4%, it would be the lowest rate since February 2008. We have not had an unemployment rate with a three handle since the early 1970s.
• NAB: Labour market data for January looms large on Thursday, but Omicron impacts will cloud any interpretation. NAB forecasts an unemployment rate unchanged at 4.2% and flat employment, though there is the risk that the unemployment rate falls sharply if those normally termed unemployed gave up searching for work during disruptions from Omicron. Forward indicators of the labour market remain very strong and we expect the labour market to rebound sharply and continue to tighten over the coming months.
• Westpac: Weekly payrolls over the 2-week reference period for the January labour force survey were down -6.8% vs December. Our +30k forecast for employment is equivalent to a -2.0% fall in original terms. Payrolls are not seasonally adjusted and measure jobs rather than people so can be skewed by changes in multiple jobholders. There are also definitional differences: workers that are employed but work zero hours and get zero pay are not counted in the payrolls data but are counted as employed in the Labour Force Survey (albeit with stand-downs captured in hours worked). All up, this suggests downside risks to our +30k employment forecast.