Modest Australian jobs gain with steady unemployment: ANZ's Felicity Emmett
GUEST OBSERVER
The April Labour Force report showed that labour market conditions remain okay, but momentum has slowed.
While labour market indicators remain mixed at the moment, we continue to expect the unemployment rate to remain close to the current 5.7 percent for the rest of the year.
Today’s numbers are unlikely to change the RBA’s view on the outlook; its focus has tilted more sharply towards inflation and we continue to expect another cut in the cash rate in August.
Today’s labour market report showed continued slowing momentum in jobs growth. Employment is now up just +0.1 percent 3m/3m compared with +0.9 percent three months ago. That said, the stability in the unemployment rate at 5.7 percent suggests that the labour market remains in good shape.
Some labour market indicators have been mixed lately. For example, ANZ job ads have been essentially flat for the last six months, and an unemployment rate based on welfare payments ticked higher in March. But indicators like capacity utilisation and profitability in the business surveys point to a solid labour market.
However, a preliminary read on our Fed-style labour market conditions index, which distils the common trend across a large number of indicators, was unchanged in April. This indicates to us that the labour market remains solid after last year’s sharp improvement was unwound.
RBA implications: While the RBA’s focus has shifted to the inflation outlook, as is always the case developments in the labour market are important for monetary policy deliberations. We think today’s numbers are likely to be broadly as the Bank expected.
That said, we continue to expect another 25bp rate cut in August given the sharp downgrade to its inflation forecast.
