If you’re looking for a quick market catalyst to trade this week, then Australia’s jobs report for June might be a good option. This report is up for release on July 20, 2:30 am GMT, and here are some things you need to know if you’re playing this event.
How did the previous report turn out?
The Land Down Under printed its third consecutive upside surprise in jobs data and chalked up eight straight months in employment gains last May, reflecting strong positive momentum in hiring.
The economy added 42K jobs that month while the previous reading was upgraded from 37.4K to 46.1K, and the unemployment rate improved to 5.5%. Labor force participation ticked higher to 64.9% to signal that more Australians are returning to the workforce to look for jobs.
A breakdown of the positions added in May revealed that the gains were spurred by a 52.1K jump in full-time employment but that part-time hiring saw a 10.1K drop. It’s also worth noting that the number of unemployed fellas decreased by 18.6K.
What’s expected this time?
Number crunchers predict that the Australian economy likely added 15.3K jobs in June, way slower than the earlier gains. Also, an uptick in the jobless rate to 5.6% is eyed.
Leading indicators, such as the industry PMI readings from the Australian Industry Group, could have a few more clues on how the June jobs figures might turn out. In particular, the manufacturing component showed a move to mild contraction as it dropped to 49.0 for the month.
Meanwhile, the services sector churned out more upbeat readings as the jobs component climbed 4.0 points to 53.2 in June. The construction sector’s jobs sub-index indicated a smaller pace of growth as it dipped 0.4 points to 54.2.
Lastly, the NAB monthly business confidence survey revealed that Australian firms reported mostly steady hiring conditions. “Although they did not improve, employment conditions are at levels that would indicate enough employment growth to lower the unemployment rate over coming months – and is consistent with reads on the labour market reported by the ABS,” the report indicated. “That said, other indicators, such as the underemployment rate, suggest there is still a fair degree of slack in the labour market, which is weighing on wages growth.”
How might AUD react?
All in all, industry indicators appear to be consistent with the idea of seeing slower jobs growth for June, but revisions to previous reports probably shouldn’t come as a surprise and might also be a factor in the Aussie’s price reaction. Heck, three out of the last five reports saw significant positive revisions in earlier releases!
More often than not, the Australian dollar tends to have a bullish reaction when the headline figures surprise to the upside, and even more so if previous readings enjoy upgrades. Conversely, a worse-than-expected reading usually results in the Aussie getting dumped.
Also, keep in mind that the RBA sounded less cheery than expected in their latest policy statement, so a weak employment report could reinforce downbeat expectations. Still, the Aussie has been on a good streak recently thanks to risk-taking, which means that a strong jobs figure could provide more fuel to these ongoing rallies.