The Thoughts Of The “Big 4” Ahead Of Labour Market Data

Summaries of the thoughts of the “Big 4” Australian banks when it comes to the upcoming March labour market report can be found below:

• ANZ: We expect unemployment to fall to 3.8% in March, which would be the lowest in the survey’s history since 1978. We see another solid employment gain of 50K. The east coast flooding contributed to weakness in the payroll jobs data but the effect on the labour force survey will likely be smaller. If it does weigh on employment growth more than we expect, participation would also likely fall, which means we could see a sub-4% unemployment rate regardless.
• CBA: The labour market has been on an incredible trajectory recently and we expect it to continue to tighten in March. We forecast that employment will increase by 40,000, the unemployment rate to drop to 3.9% and the participation rate will rise by 0.1ppts to 65.5%. This would be the lowest national unemployment rate since the survey began in 1978 highlighting how tight the labour market currently is.
• NAB: We expect the unemployment rate to fall one-tenth to 3.9% on the back of a 50K employment gain. If realised, that would see the unemployment rate at its lowest level since 1974 and running well ahead of the RBA’s February SoMP forecasts. A sub-4% rate would also increase the RBA’s confidence in the outlook for a material lift in wages growth and allow the RBA to continue its shift to being forward looking, rather than waiting on the slow-moving and lagged WPI wages data.
• Westpac: Comparing reference weeks in March to February, payroll jobs fell 0.4% in March. Our +25K forecast rise in seasonally adjusted employment is a 0.2% decline in original terms. Back in March 2021 payrolls lifted 1.4% while employment gained 0.2%. So, while the extreme weather events may have slowed employment growth, it did not make it stall. Given how close our forecast is to our March estimate for rise in payroll jobs we confirm our March Labour Force employment forecast at +25K. February was the lowest unemployment rate since August 2008 and only the third time in the history of the monthly survey that the unemployment rate has been below 4.0% (February 2008, August 2008, February 2022). There was a lower unemployment rate back in November 1974 but back then the survey was quarterly. We believe there is still some scope for participation to drift higher and a 0.1ppt rise to 66.5% would see the unemployment rate holding flat at 4.0%.