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News traders huddle up! On Thursday (October 19) at 12:30 am GMT, the Australian Bureau of Statistics (ABS) will publish Australia’s labour market numbers for the month of September.

If you’re planning on trading the event, then we should at least answer the basic questions:

What happened last month?

Australia saw a net of 54,200 jobs added for the month of September, which is A LOT higher than the 20,000 increase expected and July’s net gain of 27,900. In fact, August’s release marks the biggest jump since October 2015 and the 11th consecutive month of job gains. That’s the longest streak in 23 years!

Details reveal that 40,100 workers had found full-time jobs for the month, while a net of 14,100 job seekers found part-time work. This is probably why the seasonally adjusted hours worked for all jobs also edged 0.4% higher.

The improving labour market is likely why the participation rate jumped from 65.1% to 65.3%, its highest since September 2012. And the increase in workers looking for jobs seems to have balanced out the additional job opportunities, which is why unemployment rate remained at 5.6% as expected.

Despite that, the quarterly trend of underemployment rate – which measures those who would like to work more hours – remained at a historical high of 8.7% in the three months to August. So while more Australians are finding jobs, a record percentage of workers want higher wages and could postpone their spending unless they get them.

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

Not surprisingly, the Aussie shot higher across the board at the overwhelmingly positive data and stayed near its intraday highs until risk aversion and dollar strength in the succeeding trading sessions weighed on the comdoll.

What are market players expecting this time?

Traders estimate that Australia will add a net of 15,000 jobs for the month of September 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 is ANZ’s job ads report, which took a breather in September after showing gains in the last six months. The index fell flat while annualized growth slipped to 12.5% from August’s 13.0% reading.

Still, the firm suggests that “[s]ome moderation in job ads is not too surprising” after a positive run and that “labour market strength is likely to continue” with labour market conditions matching elevated business conditions. ANZ added that

“The recent decline in the underemployment rate will also provide greater confidence that the labour market is tightening, supporting the RBA’s view that a pick-up in wage growth will eventually follow.”

National Australia Bank (NAB)’s business survey wasn’t as peachy. Though business confidence edged 2 points higher to +7 and business conditions remain unchanged at a strong +14, the employment component also gave back its August gains and went back to July’s 7 reading.

Still, the firm thinks that the labour market will “see further improvement going into 2018” that will help convince the RBA to “shift away from emergency stimulus settings by H2 2018” if the central bank overlooks the elevated underemployment, an elevated AUD, household debt and peaks in LNG exports and housing construction.

Meanwhile, Australian Industry Group (AIG)’s Performance of Manufacturing Index (PMI) fell 5.6 points to 54.2 in September after spiking to 59.8 in August.

Like in most of its components, the employment sub-index showed slower growth (down 4.0 points) at 52.4, which AIG says is consistent with ABS estimates of manufacturing employees declining but are working more hours.

Like the PMI, AIG’s Performance of Services Index (PSI) showed slower growth in September. The index fell by 0.9 points to 52.1 with employment growth falling by 1.1 points to 51.4. What’s more, the wages sub-index also showed a 1.5-point decline to 56.2 after spiking higher in August.

Last but not the least is AIG’s Performance of Construction Index (PCI), which also showed slower growth by falling by 0.6 points to 54.7 in September.

Interestingly, the employment component actually IMPROVED by 3.9 points to 55.4 from August’s 51.6. This marks the fifth consecutive month of growth and the seventh increase in eight months.

Wages also ticked another 1.5 points higher to 66.8 points, which makes it the fastest rate of expansion in construction wages in almost nine and a half years. This supports RBA’s optimism that “a number of large infrastructure projects related to the construction of road and railways” would further support public demand.

Putting it all together

From the indices cited above, we can see that August’s surprisingly strong readings make it reasonable to expect slower employment growth in September.

But as in last month, the more important question is if the numbers will matter to the RBA. From its October meeting minutes, it looks like the central bank is already expecting low wages for quite some time but remains confident that the improvements in the labour market will soon translate to higher wages and eventually stronger consumer spending.

Will we see some retracement for job gains in September? Or will it surprise the markets again with even stronger numbers?

In any case, make sure you keep your eyes peeled not only on the headline numbers but also the details when the report is published on Thursday! Oh, and if you don’t feel like trading the news event, remember that staying in the sidelines is also an option. Whatever keeps you trading for another day, right?