Australian monthly jobs report is due Thursday 12 September 2018 - preview

Author: Eamonn Sheridan | Category: News

The August labour market employment report from Australia due at 0130GMT 

Well, that snuck sneaked (snuck?) up quickly
  • Employment Change: +18.0K expected, prior -3.9K
  • Unemployment Rate: 5.3% expected, prior 5.3%
  • Full Time Employment Change: prior was +19.3K
  • Part Time Employment Change: prior was -23.2K
  • Participation Rate: 65.6% expected, prior was 65.5%

This via TD … they are looking for a headline result much below that median estimate
  • we expect a brief 'seasonal' -10k August dip, not the beginning of a deteriorating labour market. We also look for -20k full-time jobs after an outsized +63k addition in the last two months. So not only do we look for a correction, but led by full-time jobs
  • August is a seasonally weak month for employment 
  • Along with seasonal patterns, the ABS acknowledged a much weaker composition in the July household sample (which will also impact the August report)
  • The sample rotation suggests that consensus is rather optimistic
What about the AUD?

A weak employment report poses some risks to what looks like a nice, short-term value trade in AUDUSD. 
  • We believe that AUDUSD is trading at a roughly 4-sigma discount, reflecting the fallout of the US-China trade wars, the China growth slowdown, alongside various local risks. 
  • Our employment forecasts is a near 3-standard deviation miss against consensus. Historically, a move of that magnitude has weakened AUDUSD around 0.6% in the first five minutes of trading over the past two years. That said, like most of the G10 employment reports, it is noisy with the usual gap of +45k between the max and the min expectation. We also note that the historical data shows that the impact to this report leans towards AUD upside rather than downside. 

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