A reminder this the RBA’s most recent communication on the labour market:
- the ongoing subdued rate of inflation suggests that a lower rate of unemployment is achievable while also having inflation consistent with target
- Given this assessment, the Board will be paying close attention to developments in the labour market
Cutting through the gobbledegook – the RBA is watching the employment market for its next rate move …
and so, therefore, should we.
- We expect a modest gain of 10k jobs in April, following the stronger-than-expected 25.7k rise in March. Our Labour Market Indicator has softened, suggesting slower – but still positive – employment growth. We expect the unemployment rate to tick up to 5.1% in April from 5.0% in March. It will only take a very small increase in the unemployment rate for it to round up to 5.1%.
- We expect little change in labour market conditions
- forecast is for a 5% unemployment rate in April (with upside risk) is based on our expectation for weak employment growth of 5k, but a tick down in the participation rate.
- Job advertisements and our internal data suggest that employment was weak in April, such that the unemployment rate could tick up to 5.1%.
- If the unemployment rate prints at either 5 or 5.1%, we believe this is consistent with the RBA remaining on hold in June, although it will retain its easing bias.
ps. Ahead of the jobs data we get wages data on Wednesday – this added by MAN:
- If unemployment remains broadly steady, we expect other labour market indicators (wages, NAB Survey, job ads) will determine the probability of a cut. On that score, we don’t expect the wages data on Wednesday to shift the policy dial. Our models suggest quarterly growth of around 0.5%for wages, which would see annual wages growth remain at 2.3%. We see some upside risk of a 0.6% increase (2.3% y/y) given there a new enterprise agreement was signed at Woolworths in the quarter, one of Australia’s largest employers.