Australian jobs key this week

Scott Haslem

LGT Crestone

The Reserve Bank of Australia’s minutes are due Tuesday and could add to its early-June meeting presser that indicated hope the pandemic recovery path might be a bit better than expected. China’s data dump is due today (Monday), and in addition to ongoing domestic recovery, we expect the recent theme of a strong industrial rebound to continue (with industrial production rising to 5% from 4% in May) but a cautious consumer (with retail still weak at -2.5% after -7.5%). Similarly, US May retail sales on Tuesday are expected to rebound 7-8% (after -16.4%) but remain well below levels of a year ago (-16% after -22%).

However, the domestic highlight this week will most certainly be Thursday’s jobs report for May. In April, while almost 5% of the workforce lost their jobs (-594,000), the unemployment rate, as shown in our chart today (from UBS and the ABS), jumped only 1% from 5.2% to 6.2%. This was mostly because a large number of people fell out of the workforce. However, a potentially more accurate measure of the situation, underemployment, jumped to 20% (also shown in the chart), above its level during the GFC and the previous 1990s recession.

This week, consensus expects another 125,000 job losses (taking the two-month sum to about -720,000), with the unemployment rate rising another 1% to about 7%. If participation were unchanged over three months, unemployment would be well over 10%. Given the relatively early-month timing of the jobs survey, with the prior survey early April and this one early May, there is a chance the unemployment rate could spike higher than expected.

However, with recent surveys showing some improvement through May for job ads and employment intentions, it will be interesting to see whether, despite a highly likely further jump in unemployment, that the measure of underutilisation pulls back from 20% and flags a potential improvement in the jobs market, consistent also with improving mobility statistics. This would be similar to the better- -than-expected trend in US jobs for May.

Australian unemployment rate to jump – but could under-utilisation show improvement?

Source: Australian Bureau of Statistics, Reserve Bank of Australia and UBS.

Be the first to know

We share Crestone Wealth Management views on a range of macro topics that we're watching. Click the ‘FOLLOW’ button below to be the first to hear from us.

General advice notice: Unless otherwise indicated, any financial product advice in this email is general advice and does not take into account your objectives, financial situation or needs. You should consider the appropriateness of the advice in light of these matters, and read the Product Disclosure Statement for each financial product to which the advice relates, before taking any action. © Crestone Wealth Management Limited ABN 50 005 311 937 AFS Licence No. 231127. This email (including attachments) is for the named person’s use only and may contain information which is confidential, proprietary or subject to legal or other professional privilege. If you have received this email in error, confidentiality and privilege are not waived and you must not use, disclose, distribute, print or copy any of the information in it. Please immediately delete this email (including attachments) and all copies from your system and notify the sender. We may intercept and monitor all email communications through our networks, where legally permitted

1 contributor mentioned

Scott Haslem
Chief Investment Officer
LGT Crestone

Scott has more than 20 years’ experience in global financial markets and investment banking, providing extensive economics research and investment strategy across equity and fixed income markets.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Please sign in to comment on this wire.

trending on livewire
Get the best of Livewire by signing up to our popular daily newsletter