National Australia Bank expects Australia's unemployment rate to edge down to 4.4% in August on a 20,000 gain in employment, a call it describes as finely balanced against a market consensus of 4.5%. July's unrounded jobless rate sat just below 4.5%, and changes to the Australian Bureau of Statistics' survey add uncertainty to the print. A drop to 4.4% would leave the labour market running tighter than the Reserve Bank of Australia has projected.
National Australia Bank expects Australia's unemployment rate to edge down to 4.4% in August, forecasting a 20,000 rise in employment in the day's labour force report. Market consensus has the jobless rate holding steady at 4.5%, so NAB frames its call as finely balanced. Labour demand indicators point to no sharp near-term shift in conditions, leaving the outcome hinging on relatively small moves in the underlying data.
A rate drop hinges on rounding
The closeness of the call comes down to where the rate started. July's figure rounded to 4.5%, but the unrounded reading sat just below that level, so only a modest improvement would be needed for the published rate to tick lower. A dip to 4.4% would reinforce the view that Australia's labour market remains tight relative to RBA projections, which could support the Australian dollar and front-end yields.
Other banks see a steadier picture
NAB's forecast runs slightly more upbeat than rival previews. Commonwealth Bank has pencilled in a 15,000 gain with unemployment steady at 4.5%. Westpac's preview noted expectations for employment to rebound with the jobless rate unchanged. A steady 4.5% print with modest job gains would largely match the RBA's own path and should draw a more muted market response.
The RBA's inflation trade-off
The result matters for the central bank. NAB noted the RBA has been explicit that cost pressures from the supply shock worsen the trade-off between supporting jobs and containing inflation. The RBA's August Statement on Monetary Policy projected unemployment finishing the year at 4.5%, so a drop to 4.4% would leave the labour market running slightly tighter than the central bank anticipated amid its focus on inflation risks.
There is an added layer of uncertainty from the ABS's modernisation of its Labour Force Survey. July's data was affected by a temporary cut to the survey sample, and August's seasonal adjustment approach is being altered, which argues for caution in reading too much into a single month's move. The survey schedule returns to normal timing from September's data, due in October, which should give a cleaner read on the RBA's room to balance jobs against inflation.
Source: investingLive
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