News traders huddle up! On Thursday (May 18) at 1:30 am GMT, the Australian Bureau of Statistics (ABS) will publish Australia’s labour market numbers for the month of April.
If you’re planning on trading the event, then you might want to take a look at these points:
What happened during the last release?
Labour market figures for March were positive all around.
The economy added a net of 60,900 jobs, smashing analyst expectations of a 20,000 gain. This marked the sixth consecutive monthly increase AND the fastest pace of increase since September 2015. What’s more, February’s 6,400 decline was revised to reflect a net gain of 2,800. Wowza!
Despite the improvement, the unemployment rate still remained at 5.9%, the highest since January 2016, while unemployed workers shot up by 4,000.
However, this might be due to labour force participation rate also popping up from 64.6% to 64.8%, its best reading in eight months.
A closer look at the details reveals more good news with a whopping 74,500 workers getting full-time employment, which offset the 13,600 decline in part-time jobs.
Even ABS’ trend terms, which the agency thinks presents a more accurate picture, shows full-time employment rising by 15,600 in March, which is its strongest increase since October 2015.
Last but not the least are total employment and total size of the labour force, which hit their highest levels on record in March.
Not surprisingly, the positive figures pushed the Aussie higher across the board. And whether it’s really, really good-lookin’ data or a lack of other catalysts during the Easter holidays, the comdoll was able to sustain its gains for the rest of the day.
AUD/USD ended the day 56 pips (+0.75%) higher to .7566, AUD/JPY jumped by 57 pips (+0.70%) to 82.54, and EUR/AUD plummeted by 163 pips (-1.15%) to 1.4032.
What can forex traders expect this time?
Market players expect the unemployment rate to remain at 5.9% for another month, while net job gains is expected to calm down to just a 4,500-net increase.
How realistic are market expectations for the upcoming release? Let’s look at a few leading indicators for clues:
According to ANZ, job advertisements rose by 1.4% in April after a 0.8% gain in March while annual figures reflect a 10.1% jump against March’s 7.1% gain. Overall, the firm believes that “we may be in for a sustained period of strength” following March’s strong numbers.
Australian Industry Group (AIG)’s Performance of Manufacturing Index (PMI) climbed 1.7 points higher into expansion territory and marked its seventh consecutive expansion in April. All seven sub-indices showed improvement with the employment component rising by 1.8 points to 55.9.
AIG’s Performance of Construction Index (PCI) grew for a third straight month in April to 51.9. The good vibes weren’t extended to the employment component, however, as the advances were isolated to new orders, deliveries, and selling prices.
Meanwhile, AIG’s Performance of Services Index (PSI) showed a 1.3-point climb to 53.0, marking the sixth out of seven months that the industry has lifted. Much like in the construction sector, though, the employment component missed out with its 3.1-point decline to 51.9.
Last but not the least is the NAB’s monthly business survey, which points to an “ongoing improvement in employment conditions.” The employment component rose by another 2 points to +8, which the agency believes points to “further pick up in official measures of employment growth.”
Tips and tricks
For now, it looks like market players have reason to expect slightly lower employment growth numbers for the month of April.
This is bad news for the Reserve Bank of Australia (RBA), which still thinks that “developments in the labour and housing markets warranted careful monitoring” despite the recent tightening of Australia’s job reports.
If you’re trading the release, though, then you might want to pay attention to the details of the release. Specifically, look for the strength of full-time jobs added as well as wage growth and working hours.
Remember that full-time jobs tend to support more consumer spending, as buyers are more confident about where their next moolah will be coming from.
Another jump in full-time jobs could once again boost the Aussie higher against its major counterparts. But if majority of job additions come from part-time employment, then we might see the comdoll slip lower across the board.
Based on last month’s price action, we know that much of the Aussie’s reaction is centered around the release, with the possibility of extending its intraday trend at the absence of other economic catalysts.
Make sure you stick around during the release so you don’t miss any good trading opportunity!