The Big 4 Weigh In On Today’s Labour Market Report:

Below are summaries of the views of the Big 4 Australian banks ahead of the release of the February labour market report (11:30 Sydney/00:30 London):

• ANZ: We expect the unemployment rate to fall below 4% in February, for only the second time in the survey’s history since 1978, due to a solid 50K rise in employment. COVID cases were well past the peak and continuing to fall during the survey period. But it’s possible that Omicron disruptions still weighed on hiring and the February data undershoots our expectations.
• CBA: The data is expected to reinforce the tightness in the labour market and the expected acceleration in wages growth. We expect employment to lift by 40,000 and the unemployment rate to fall to 4.0% with the participation rate unchanged at 66.2%. Forward looking indicators of labour demand remain very solid and with still little growth in labour supply we expect spare capacity in the labour market to continue to fall.
• NAB: Another strong print is expected, we forecast the unemployment rate to fall 2 tenths to 4.0% on the back of a 50K gain in employment. With labour demand indicators still very strong, we see the unemployment rate moving below 4% in coming months, and again outperforming the RBA’s forecasts which at February only saw this occurring by Q322.
• Westpac: In regards to the recent floods in NSW and Queensland, they came late in the month missing the Feb reference period. While there will be some impact in Mar, most of the impact will appear in hours worked with a modest temporary hit to employment. Remembering that payrolls are not seasonally adjusted the 3.5% rise from the Jan to Feb reference periods is the same magnitude as the rise in 2021 when employment rose 2.4% in original terms. Our +60K forecast (seasonally adjusted) is a 2.3% rise in original terms. We expect participation to lift from 66.2% to 66.4%. This will temper the fall in unemployment to just 0.1ppt to 4.1%. Why not a bigger jump in participation? The jump in participation to 66.4% will be a new record high. The previous high was 64.3% in March 2021. We are cautious about how far participation can be pushed in any one month at these levels. The risk is for a small rise in participation and a larger fall in unemployment.