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8 Aug 2014
Australia: Labour market seems to have stalled - Nomura
FXStreet (Bali) - Charles St-Arnaud, FX Strategist at Nomura, notes that Thursday's jobs report in Australia suggests that the labour market seems to have stalled after a solid start to the year.
Key Quotes
"The Australian economy lost 0.3k jobs in July, in contrast to expectations of an increase of 13.9k. This follows a downwardly revised increase of 14.9k in June (Previous: 18.1k). So far this year, the economy has created 109.3k jobs. The unemployment rate increased to 6.4%% in July, the highest level since 2002, as the participation rate rose to 64.8%. All job gains came in the full-time category (14.5k), while there was a decline in part-time employment (-14.8k). The total number of hours worked fell by 0.9% m-o-m. By state, the increase in unemployment was generalised, but there were large increases in Victoria and New South Wales."
"Overall, this is a negative report as it shows the labour market could be stalling after a solid start to the year. However, the labour report is notoriously volatile and the recognition by the ABS that the change in the survey sample may be responsible for the negative print means that we should not conclude anything from only one data point. We expect the labour market to move sideways for the rest of the year as we expect growth to be slightly below trend. This report is unlikely to change the Reserve Bank‟s view of the economy or its policy stance."
"The market reacted negatively to the labour force data release. AUD/USD declined to 0.930 from 0.936, while the rates market rallied 2-4bp. As a result, the OIS curve is pricing in almost 10bp of rate cuts by year-end and a trough at 12bp in March 2015."
Key Quotes
"The Australian economy lost 0.3k jobs in July, in contrast to expectations of an increase of 13.9k. This follows a downwardly revised increase of 14.9k in June (Previous: 18.1k). So far this year, the economy has created 109.3k jobs. The unemployment rate increased to 6.4%% in July, the highest level since 2002, as the participation rate rose to 64.8%. All job gains came in the full-time category (14.5k), while there was a decline in part-time employment (-14.8k). The total number of hours worked fell by 0.9% m-o-m. By state, the increase in unemployment was generalised, but there were large increases in Victoria and New South Wales."
"Overall, this is a negative report as it shows the labour market could be stalling after a solid start to the year. However, the labour report is notoriously volatile and the recognition by the ABS that the change in the survey sample may be responsible for the negative print means that we should not conclude anything from only one data point. We expect the labour market to move sideways for the rest of the year as we expect growth to be slightly below trend. This report is unlikely to change the Reserve Bank‟s view of the economy or its policy stance."
"The market reacted negatively to the labour force data release. AUD/USD declined to 0.930 from 0.936, while the rates market rallied 2-4bp. As a result, the OIS curve is pricing in almost 10bp of rate cuts by year-end and a trough at 12bp in March 2015."