Upcoming: Australia December Employment Change

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The next bit of economic data coming out of Australia could have a significant impact on the AUD.

The RBA is closely watching the labor market, as it sees the creeping increase in unemployment as a challenge to maintaining the inflation rate.

Depending on the results, it could affect the calculations for the next rate move.

According to the latest survey of Australian economists, there is a 55% chance that the RBA will embark on further easing at their next meeting.

This is one of the contributing factors to generalized weakness in the Aussie lately. Of course, this doesn’t discount the impact that the wildfires could have on the economy, which remains unknown as yet.

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It Doesn’t Rain But it Pours

A further drag on the AUD is the rising concerns over the outbreak of coronavirus in China. This outbreak could hinder Australia’s largest export partner. Travel restrictions could significantly impact the tourism industry and demand for dollars.

So, there are several factors that could compel the RBA to cut rates in order to shore up the economy in the near term.

On the other hand, last week, Retail Sales came in above expectations. And consumer confidence doesn’t to be daunted. It is the only bright spark in a sea of generally less than stellar economic data. And employment figures are not expected to help improve that outlook!

What We Are Looking For

For the upcoming data, expectations are that Australia added 13.7K net jobs in December. This is a drop from November’s 39.9K.

A result like this would be near the bottom of the somewhat “normal” range between 10K and 40K that we saw prior to the latest economic lethargy. Meanwhile, expectations are for the participation rate to remain flat.

We can expect the unemployment rate to tick up once again to 5.3% compared to 5.2% prior.

The rate of jobseekers has been bouncing between those two numbers for almost a year at this point, despite the efforts of the RBA.

The Context

Several analysts say that the RBA considers unemployment above 5.0% as “high.” So, we would expect a move above that level to increase the odds of a rate cut at the next meeting.

On the other hand, many could see a result below 10K as confirmation that the latest positive news is not lasting, and likely won’t translate into lasting inflation growth.

A result closer to the 40K might be necessary to significantly push the AUD higher.

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