Australia jobs data: rebound expected in August, unemployment steady at 4.5%

The figures are released just days before the Reserve Bank of Australia's 29 September meeting, where a rate rise is widely anticipated, so an outcome at or above forecasts would have little impact on near-term pricing but could reinforce expectations of another increase in November. A second consecutive drop in employment, or a rise in unemployment, would weaken the argument for a further hike and could put pressure on the Australian dollar and short-dated bond yields. With the forecast range spanning 10,000 to 47,000, the potential for surprise is considerable on both sides. Traders are also likely to compare the release with the September flash PMI, which indicated the sharpest fall in private sector jobs since 2020.

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Earlier:

• Australia flash PMI: growth slows to Q3 low as factories contract and firms cut jobs
• RBA governor Bullock flags inflation risks as higher neutral rates come into focus

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Australia's labour market is expected to recover from July's setback, but a slowing trend and a hawkish RBA make Thursday's figures more than a routine update.

Summary:

• Australia's August labour force data are due at 11.30am Sydney time on Thursday 24 September (0130 GMT Thursday, 2130 US Eastern time Wednesday)
• The market expects employment to rise by about 20,000, with forecasts ranging from 10,000 to 47,000; Westpac forecasts a stronger 30,000 gain
• Employment fell by about 16,000 in July, below all expectations, after solid gains of about 38,000 in May and 80,000 in June
• The unemployment rate is expected to hold at 4.5%, with forecasts between 4.4% and 4.5%
• July's rate edged up only fractionally, from 4.43% to 4.46%, but enough to round up from 4.4% to 4.5%
• Westpac expects employment growth to slow through the second half of the year as headwinds build

Australia's August labour force figures are expected to show employment recovering after a surprise decline in July, with the unemployment rate seen holding at 4.5%. The data are due at 11.30am Sydney time on Thursday 24 September, which is 0130 GMT on Thursday and 2130 US Eastern time on Wednesday.

Markets expect employment to have risen by about 20,000 in August, although forecasts range widely, from 10,000 to 47,000. Westpac is more optimistic than the consensus, pencilling in a gain of 30,000. Forecasts for the unemployment rate sit between 4.4% and 4.5%, with both Westpac and the market median at 4.5%.

The rebound would follow a weak July, when employment fell by about 16,000. That result was below market expectations and at the bottom of analysts' individual forecasts, coming after strong gains of about 38,000 in May and around 80,000 in June. Westpac said that, looking past monthly volatility, employment growth had been running at a relatively robust pace through the first half of the year, supported by the earlier recovery in economic growth.

The July unemployment rate was less dramatic than the headline suggested. The drop in employment was partly offset by a fall in the number of people looking for work, as the participation rate, the share of working-age Australians employed or actively seeking a job, slipped by 0.1 percentage point. That cut the labour force by about 12,000. As a result, the unemployment rate barely moved, edging up from 4.43% to 4.46%, just enough to round up from 4.4% to 4.5%. Westpac assumes participation holds steady at 66.9% in August, keeping the unemployment rate at 4.5%.

Beyond August, Westpac expects the labour market to lose momentum. The bank said headwinds are building and anticipates a slowdown in employment growth through the second half of the year. Early survey evidence points the same way: the S&P Global flash PMI for September showed private sector employment falling for the first time in four months, with the modest decline the steepest since October 2020.

The timing gives the data added weight. The Reserve Bank of Australia meets on 28 and 29 September, and markets widely expect it to raise its cash rate from 4.35%. A solid August result would reinforce the view that the labour market remains resilient enough to absorb tighter policy, while a second consecutive decline in employment could sharpen debate over how far the RBA will need to go after next week.