- Australia jobs report: Employment Change: +41.1K (vs. expected +14.0K) - Bullish.
- Australian Unemployment Rate July: 5.2% (est 5.2% ; prev 5.2%) - Bullish.
- AUD/USD spikes 0.46% on the headline data as leaves RBA outlook in a more neutral position.
The key June employment report from Australia has arrived. Last time around, "June saw a near-flat reading on total employment, though with full-time jobs up 21k, offset by a similar fall in part-time jobs. This followed steep gains in Apr and May, both >40k," analysts at Westpac explained whose analysts were looking for another modest rise, 5k, which would keep annual jobs growth at a still swift 2.4%. "We look for the unemployment rate to round up to 5.3% versus consensus of steady at 5.2%."
July's data came as follows:
- Australian Unemployment rate: 5.2% (est 5.2%; prev 5.2%).
- Australian Employment change: +41.1kk (est 14k) (Makes up for last months lull)
- Australian Full Time Employment Change June: 34.5 vs the prior Revised 21.1K. (Bullish)
- Australian Part Time Employment Change June: 6.7k vs prior was -23.3k.
- Participation Rate June: 66.1% vs (expected 66%, prior was 66%).
All in all, a sold jobs report.
About the Employment Change
The Employment Change released by the Australian Bureau of Statistics is a measure of the change in the number of employed people in Australia. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. Therefore, a high reading is seen as positive (or bullish) for the AUD, while a low reading is seen as negative (or bearish).
FX implications:
The Aussie has been passed around like a hot potato as it trades as a proxy to the trade wars and Chinese economic performances which have recently proven to disappoint yet again. Risk-on and risk-off sentiment in yo-yo markets have been leaving AUD/USD to trade in a show, sideways within a wide range of between 1.2% or, over 2.105 if we include the downside spike to the august lows of 0.6677.
The Reserve Bank of Australia will be taking note of this solid data, but, when coupled with a lower inflation expectations, the Aussie should stay better offered on domestic fundamentals alone, let alone risks to global growth and trade war between the US and China.
"Market-based inflation expectations, both short and long term, have fallen a lot over the last year. Worryingly for the RBA, the market now expects inflation to average around 1.5% over the next 10 years and to stay below 2% for around 25 years,"
analysts at ANZ Bank explained.
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