🇦🇺Cable FX Macro Weekly Note: Australia Feb. Labour Report

**As seen in Risk In The Week report 03/11/23, subscribe at cablefxm.co.uk/reports

Australian employment update showed an 11.5K jobs shed during January, this was a downside surprise to the consensus estimate of +20.0K. December net labour change also showed a decline, this is the first time we see consecutive months of contractions since 2021. The unemployment rate ticked higher to 3.7% from a prior 3.5%, while the participation rate missed estimates at 66.5%. The declines were led by full-time employment dropping by 43.3K, the largest job contraction since July. The release sets a shift in expectations for the future of the economy and RBA policy, especially as the unemployment rate bounces off the lowest levels on record. The most recent survey compiled by Bloomberg showed economists pencilling the Australian economy expanding by 1.8% in 2023 and 1.6% in 2024, the chance of a recession has been projected relatively low when compared to other G10 countries. The same survey sees the unemployment rate rising to 3.9% by end of year, the range of forecasts goes from 3.5% to 4.6%, the median projection sees the metric rising to 4.4% by 2024. An easing in the labour market would translate into a less hawkish RBA policy path, as wages prices pressures could follow the trend. Economists see average hourly earnings rising by 3.9% Y/y in 2023, ANZ stands above the consensus as it projects the figure at 4.3%, before a slight ease to 4.2% in 2024. ANZ economists expect the RBA to finish the year with the Cash Rate at 4.10%, which is only 50bps from where it currently stands. The desk at Westpac stands in line with the consensus and sees February posting 50.0K jobs and jobless rate back to 3.6%. Given the arithmetic in population/jobs, Westpac says that if the headline were to print above 50.0K, the unemployment rate does not necessarily would fall much lower as participation will also be boosted.