Australia’s January Unemployment Change

The release is scheduled for Wednesday at 19:30 EST (or Thursday at 01:30 CET). Here are some things to keep in mind ahead of this data.

The Headline Data Numbers

Of the three bits of data coming out at the same time, the one that the markets gravitate towards is the rate itself. This rate is seasonally adjusted to account for the large agricultural base in the Australian economy.

Employment data is less relevant to monetary policy in Australia than in it is to monetary policy in the US. This is because the RBA doesn’t have a mandate to keep employment low.

However, the bank is notoriously conservative. It takes a hardline stance in regards to inflation and changes in employment can be indicative of future inflationary pressures or reliefs.

So, it is still a significant piece of data on the monthly economic calendar. But, its effect on the currency is indirect and based on the expectations that it conveys regarding future inflation trends.

The Latest Figures

Australia has a bit of what might be called a “good problem”. The unemployment rate lately has been quite low. Last month, it dropped back to 5.0%, the lowest of the last seven years.

The reason this is a problem is that economists generally agree that structural employment is somewhere between 4-6%. And Australia is well within that range.

As we’ve discussed previously, structural employment is an essential factor in assessing the inflation impact of employment. This is because as it drops around that level, it becomes increasingly hard for companies to find employees.

This causes labor cost inflation and can ultimately impact productivity, as work goes undone for lack of employees. This is considered as negative for the economy, and might even prompt intervention from the RBA.

The Labor Situation

Lately, however, Australia’s CPI has been hovering close to the central bank’s target of 2.0%, staying around that level since the beginning of 2017. While that might be comforting for policymakers, the quarterly wage price index has been increasing by over 2,0%.

1 2
View single page >> |

Disclaimer: Orbex LIMITED is a fully licensed and Regulated Cyprus Investment Firm (CIF) governed and supervised by the Cyprus Securities and Exchange Commission (CySEC) (License Number 124/10). ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.