The ‘Big 4’ Preview The Labour Market Report

The views of the ‘Big 4’ on today’s labour market report (due 11:30 Sydney/02:30 London) are summarised below:

• ANZ: June saw a big labour market result with employment jumping by 88K and unemployment dropping 0.4ppt to 3.5%. But there is still a big gap to close on the 480,000 job vacancies reported in May. For July, we expect another solid rise in employment of 40K which should see the unemployment rate edge down to 3.4%, even with a small rise in participation.
• CBA: The June labour force survey showed an incredible tightening, with a massive 88.4K increase in employment and a sharp fall in the unemployment rate to just 3.5%. We expect the labour market remained tight in July and anticipate a 20K lift in employment and an unchanged unemployment rate. However, we see a risk of a softer outturn owing to the usual sample rotation the ABS employs. Indicators of labour demand in the economy also eased in July, with various job vacancy and job ads data turning down.
• NAB: We forecast the unemployment rate to remain stable at 3.5% in July and employment growth to moderate to 20K in the month. The June employment data showed a precipitous 4 tenths fall in the unemployment rate and an 88K surge in employment. Employment indicators out of the NAB Business Survey remain very strong, and consumer unemployment expectations remain low. We have written that 2 consecutive months of decline in Seek new Job Ads could be a signal of a peak in unmet labour demand, but the level of advertising is still consistent with exceptionally strong demand for additional labour. While it is difficult to bet against the strength of the demand backdrop, in favour of a softer number are technical factors that point to upside risk to the unemployment rate in July.
• Westpac: Business surveys, consumer sentiment surveys and job vacancies all point to continuing solid demand for labour. Weekly payrolls for July did reveal some weakness but these are not seasonally adjusted and the ABS noted higher than usual absences for illness and holidays which will affect hours worked rather than employment. As such we have an around trend forecast of +50K. The volatility in weekly payrolls due to illness and holidays is unlikely to have a meaningful impact on seasonally adjusted participation. As such, we look for a further 0.1% increase in participation to 66.9% limiting the fall in unemployment to 0.1ppt to 3.4%.