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11 Apr 2013
Forex Flash: Australian employment surprises again - Nomura
FXstreet.com (Barcelona) - Nomura economists note that the Australian economy lost 36.1k jobs in March, much worse than consensus expectations of a 7.5k increase
They see that this follows an upwardly revised 74k gain in February. They write, “As a result of the decline in employment, the unemployment rate increased to 5.6% from 5.4%, the highest level since November 2006, while the participation rate fell to 65.1% from 65.3%. Most of the job losses were in part-time jobs (-28.7k). The total number of hours worked was down 0.3% m-o-m as a result of the lower level of employment.”
They see that the data shows that most of the job losses in March were in Victoria, Queensland, Western Australia and Tasmania, while there were gains in New South Wales. However, there is a big discrepancy between the sum of the seasonally adjusted changes in employment by state (a loss of about 20k) and the headline number. They note that a similar discrepancy can also be seen in the February numbers, where the headline number was about 40k higher than the sum of state-by-state increases.
Overall, they view this report as a correction after the unexpected strength in employment in February. Nevertheless, the economy has created about 50k jobs in Q1, which is much stronger than the economic performance over the period would suggest. As such, they expect further under performance in the labour market over the next few months. The report does not change their view that the Reserve Bank will retain its easing bias.
They finish by writing, “The Australian rates market rallied to session highs (8bp) on the released of the employment number. While the headline employment number was greeted with skepticism following the strong rise last month, the higher unemployment number cements for some the anecdotal weakness in jobs and also reflects risks to positioning. AUD/USD dipped around 5 pips to 1.0510.”
They see that this follows an upwardly revised 74k gain in February. They write, “As a result of the decline in employment, the unemployment rate increased to 5.6% from 5.4%, the highest level since November 2006, while the participation rate fell to 65.1% from 65.3%. Most of the job losses were in part-time jobs (-28.7k). The total number of hours worked was down 0.3% m-o-m as a result of the lower level of employment.”
They see that the data shows that most of the job losses in March were in Victoria, Queensland, Western Australia and Tasmania, while there were gains in New South Wales. However, there is a big discrepancy between the sum of the seasonally adjusted changes in employment by state (a loss of about 20k) and the headline number. They note that a similar discrepancy can also be seen in the February numbers, where the headline number was about 40k higher than the sum of state-by-state increases.
Overall, they view this report as a correction after the unexpected strength in employment in February. Nevertheless, the economy has created about 50k jobs in Q1, which is much stronger than the economic performance over the period would suggest. As such, they expect further under performance in the labour market over the next few months. The report does not change their view that the Reserve Bank will retain its easing bias.
They finish by writing, “The Australian rates market rallied to session highs (8bp) on the released of the employment number. While the headline employment number was greeted with skepticism following the strong rise last month, the higher unemployment number cements for some the anecdotal weakness in jobs and also reflects risks to positioning. AUD/USD dipped around 5 pips to 1.0510.”