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Westpac: Clear Upside To Labour Market Expectations

AUSTRALIA
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Ahead of today’s labour market report Westpac note that “the 11.5k decline in employment in January marked the second consecutive fall in jobs growth from the Labour Force Survey. With a three-month average increase in employment of just 1k and annual growth in employment moderating to 3.0%yr in January from 6.8%yr in October, it raises the question - whether the Australian labour market stalled into early 2023.”

  • “The positive is that the January survey reported a larger-than-usual number of people indicating that they have a job to go to in the future. This, coupled with the recent run of soft prints, suggests that employment growth should bounce in the February survey.”
  • “We are, however, cautious about forecasting a particularly large rise in employment given the uncertainty around holiday and illness dynamics.”
  • “We have pencilled in a 50k rise in employment for February, but risks are clearly to the upside.”
  • “On our expectation is that the participation will hold flat at 66.5%, the unemployment rate edges lower, from 3.7% to 3.6%.”
  • “If, alternatively, the jump in employment is much larger than our 50k forecast, a sharp move lower in the unemployment rate will not necessarily occur. This is because, a significant proportion of those not employed in January but with a job to go may have been out of the labour force. So, upon return, they will not only boost employment but also participation.”
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Ahead of today’s labour market report Westpac note that “the 11.5k decline in employment in January marked the second consecutive fall in jobs growth from the Labour Force Survey. With a three-month average increase in employment of just 1k and annual growth in employment moderating to 3.0%yr in January from 6.8%yr in October, it raises the question - whether the Australian labour market stalled into early 2023.”

  • “The positive is that the January survey reported a larger-than-usual number of people indicating that they have a job to go to in the future. This, coupled with the recent run of soft prints, suggests that employment growth should bounce in the February survey.”
  • “We are, however, cautious about forecasting a particularly large rise in employment given the uncertainty around holiday and illness dynamics.”
  • “We have pencilled in a 50k rise in employment for February, but risks are clearly to the upside.”
  • “On our expectation is that the participation will hold flat at 66.5%, the unemployment rate edges lower, from 3.7% to 3.6%.”
  • “If, alternatively, the jump in employment is much larger than our 50k forecast, a sharp move lower in the unemployment rate will not necessarily occur. This is because, a significant proportion of those not employed in January but with a job to go may have been out of the labour force. So, upon return, they will not only boost employment but also participation.”