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News traders huddle up! On Thursday (August 17) at 2:30 am GMT, the Australian Bureau of Statistics (ABS) will publish Australia’s labour market numbers for the month of July.

If you’re planning on trading the event, then you might want to take a look at these points:

What happened last time?

A net of 14,000 workers had found jobs in June, which missed analysts’ expectations of a 15,000 uptick. However, it also marked the ninth month (and longest streak) of net jobs added since January 2011. Not bad, huh?

Digging deeper into the report, we find that full-time employment had risen by 62,000 while a net of 48,000 part-time workers had lost their jobs. This is still good news for the RBA since full-time jobs mean longer working hours and (usually) more consumer spending.

The unemployment rate remained at 5.6%, which is still the lowest since October 2016 after May’s rate got revised higher to 5.6%.

Labour force participation rate might have something to do with it, as it climbed from 64.9% to a 17-month high of 65.0% and signalled that more workers are encouraged to find jobs.

Last but not the least is the hours worked, which ticked 0.5% higher to 1,703.50. Since June’s jobs data confirmed the RBA’s specific remarks on the surge in full-time hiring and working hours, the report should’ve been positive for the Australian dollar.

AUD's 15-Minute Forex Charts
AUD’s 15-Minute Forex Charts

But the bulls just weren’t in the mood to buy. The Aussie spiked higher at the release of the report, but soon lost steam as traders focused on the headline miss and May’s downgraded numbers.

What are market players expecting this time?

Traders estimate that Australia will add a net of 20,300 jobs for the month of August while unemployment rate is expected to remain at 5.6%.

How realistic are market expectations for the upcoming release? Let’s look at a few leading indicators for clues:

First, ANZ’s job advertisements continued to trend higher in July. Job ads are up by 1.5% while annual growth improved from 10.5% to 12.8%. The firm believes that indicators “point towards near-term jobs growth in the order of 15-20k per month” even as it expects the pace to “moderate over the medium-term.”

And then there’s National Australia Bank (NAB)’s monthly business survey, which showed business conditions rising to its highest since 2008 while business confidence also rose by 4 points for the month. NAB shared that “persistent strength” in employment conditions has made it “optimistic about the near-term outlook for the labour market.

Meanwhile, Australian Industry Group (AIG)’s Performance of Manufacturing Index (PMI) clocked in its 10th consecutive uptick, this time increasing by a point to 56.0 in July. 6 out of 7 sub-indices all showed improvement, with the employment component rocketing by 8.4 points to a positive 57.4 reading.

AIG’s Performance of Construction Index (PCI) also joined the hype by rising 4.5 points higher to 60.5 in July, which marks its strongest reading since the survey started in 2005. All four sub-indices showed improvement with the employment component rising by 4.8 points to 59.0.

Last but not the least is AIG’s Performance of Services Index (PSI), which saw a 1.6-point increase to 56.4 and marked its fifth consecutive expansion. All five sub-indices showed progress, with the employment component rising by 3.7 points to 56.9.

Putting it all together

Based on the leading indicators above, it looks like market players have good reason to expect further gains in Australia’s labour market.

The question is, should it matter to forex traders? In its August meeting minutes published earlier today, the Reserve Bank of Australia (RBA) already noted that indicators point to “further employment growth and little change in the unemployment rate over coming quarters.

However, Lowe and his team also said that there’s “uncertainty about the effect any decline in spare capacity in the labour market would have on wage and price inflation.

Specifically, they’re worried that wage and price inflation haven’t increased for other economies that are also close to full employment either, so it’s still possible that “low inflation in Australia might also persist longer than forecast.

This means that improvements in the labour market probably won’t prompt policy changes unless wage growth improves.

Look for additions in full-time jobs, as more full-time workers means steadier pay and more spending capacity. Also look at wage growth and working hours, which eventually both factor in consumer spending.

Oh, and pay attention to the quarterly wage price index due tomorrow (August 16) at 2:30 am GMT, will ya? Analysts are expecting wages to grow by another 0.5%, but a significantly lower reading could undermine any improvement we’ll see on Thursday and convince the RBA to keep its easy policies.