According to forecasts from six major banks, will the unemployment rate eventually round off to less than 4%?
Australia is due to release its April jobs figures on Thursday May 19 at 01:30 GMT and as the time for release approaches, here are the forecasts from economists and researchers at six major banks for the data to come on employment.
Australia is expected to have added 30,000 jobs during the month, while the unemployment rate is expected to fall to 3.9% from the current 4%.
“A move in unemployment below 4% is likely after March data just rounded to 4%. This will underscore how tight the labor market is, supporting our expectation that the acceleration wage growth is just beginning. And once wage growth is established, it usually takes many rate hikes to bring it back down. This sets the backdrop for our continued expectation that a cash rate of 3%+ will eventually be needed.
“Our current forecast for April Labor Force Survey employment is +32K, which we estimate to be a 0.3% increase in origin terms (not seasonally adjusted). We see the unemployment rate rounding up to 3.9%.
“After the flooding disruption, we expect the April jobs report to be robust (40,000), which should reinforce our call for a 40 basis point hike at the June meeting.”
“Australia’s April unemployment is on track for its lowest ever rate of 3.9% as the number of unemployed in the labor force is expected to fall slightly for a third month in a row, while higher wages high should also contribute to an uptick in total employment.This labor market tightness, coupled with comments from the Reserve Bank of Australia that their regional surveys are pointing to higher wage growth, leads us expect the wage price index growth rate for 1Q22 to be close to 3% – in line with the previous RBA benchmark required for “sustained” inflation. this could set us up for another rate hike as early as June.”
“We expect the pace of job growth to pick up again in April, rising from 1.6% to 3.2% in annualized growth, suggesting continued strength in the labor market recovery. We expect the unemployment rate to fall to a record low below 4.0%, and we see the participation rate increasing slightly to a new record high, which would provide further evidence of the extraordinary tension from the current labor market conditions.Monthly hours worked would also rebound from the flood-induced decline in March.”
“Australia April Labor Force Survey: Citi Employment Forecast; 38KK, Citi unemployment rate forecast; 3.9%, previous; 4.0%, Citi’s participation rate forecast; 66.5%, previous; 66.4%. The risk to the forecast is a lower unemployment rate, possibly higher employment growth and a weaker than expected participation rate. Overall, we expect this to put additional pressure on the RBA to persist in its tightening cycle.