Following a disappointing report on Australian wage growth on Wednesday, the Australian Bureau of Statistics is due to give an outline on the state of the labor market at 0030GMT on Thursday. Unlike wage forecasts which projected a rise in earnings, analysts anticipate the economy to create fewer jobs in October, maintaining the unemployment and participation rates steady at their previous levels. If the numbers fail to meet expectations or otherwise fail to impress, then the aussie could get another shake tomorrow as a slow-growing jobs market would keep wage growth subdued for longer, harming household spending which is a crucial contributor to economic growth.
In October, analysts anticipate 17,500 additional workers to join the labor market in Australia compared to the 19,800 seen in September, marking 13 consecutive months of gains. They also project the unemployment rate to hold flat at a four-year low of 5.5%, which is slightly above the RBA’s rate under full employment, and the participation rate to remain steady at a two-year high of 65.2%.
However, the change in full-employment positions will also gather attention as an increase in such jobs has the capacity to push the unemployment rate even lower given that the ratio is calculated factoring in full-time workers rather than part-time ones. Such a development would be good news for RBA policymakers who believe that the unemployment rate will decline to 5.25% by the end of 2019. In September, 6,100 full-time positions were added in the economy, well below the number of 39,500 observed in August.
Still, the RBA might get dashed if low-income industries absorb a larger proportion of workers, restraining wage growth from rising faster and hence limiting inflation which has stuck under the central bank’s target band of 2-3%. Consumers will also find it difficult to repay their overloaded debt obligations, meaning that household spending will narrow as well.
Should the data miss forecasts, aussie/dollar will likely extend its downtrend towards the 0.75 key level which acted as a barrier to upside movements in May, while the area around the 0.7326 mark, the lowest level reached since the beginning of the year, could also provide support given a sharper down movement.
Alternatively, if the data surprise to the upside, the 200-day simple moving average (SMA) of 0.7697 could provide resistance ahead of 0.7818, this being the 50-day SMA.
