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10 Dec 2015
Australia: Labour data came as an upside surprise – Deutsche Bank
FXStreet (Delhi) – Phil O'Donaghoe, Economist at Deutsche Bank, notes that the Australia’s labour force figures surprised to the upside with a gain of 71.4k in employment in November.
Key Quotes
“There will be a number of people, again, struggling to believe these data (especially coming in the wake of the 56.1k increase in employment in October). Indeed, there is evidence of sample rotation having a significant impact on the data. The ABS note that: “of the 69,600 increase in the number of employed persons (in original terms) ... 52,700 came from the aggregate difference between the outgoing and incoming rotation groups.” To translate, the group that rotated into the survey in November had a much greater tendency to be employed than the group that rotated out.”
“While this has the impact of significantly boosting employment growth and also the participation rate, the impact on the unemployment rate is typically much more muted. And here we think it worth noting that Australia’s unemployment rate now appears to be trending down, something that would make it very, very difficult to see a rate cut early next year. We remain of the view that 2% will mark the low for Australia cash rate. A downtrend in the unemployment rate means, however, that market participants should not completely rule out the possibility that 2016 sees a rate hike in Australia.”
Key Quotes
“There will be a number of people, again, struggling to believe these data (especially coming in the wake of the 56.1k increase in employment in October). Indeed, there is evidence of sample rotation having a significant impact on the data. The ABS note that: “of the 69,600 increase in the number of employed persons (in original terms) ... 52,700 came from the aggregate difference between the outgoing and incoming rotation groups.” To translate, the group that rotated into the survey in November had a much greater tendency to be employed than the group that rotated out.”
“While this has the impact of significantly boosting employment growth and also the participation rate, the impact on the unemployment rate is typically much more muted. And here we think it worth noting that Australia’s unemployment rate now appears to be trending down, something that would make it very, very difficult to see a rate cut early next year. We remain of the view that 2% will mark the low for Australia cash rate. A downtrend in the unemployment rate means, however, that market participants should not completely rule out the possibility that 2016 sees a rate hike in Australia.”