Australian Employment Preview: Forecasts from six major banks, will unemployment rate finally round down to less than 4%?

Australia is set to report its April employment figures on Thursday, May 19 at 01:30 GMT and as we get closer to the release time, here are forecasts from economists and researchers at six major banks regarding the upcoming employment data.

Australia is expected to have added 30K positions in the month, while the unemployment rate is foreseen down to 3.9% from the current 4%.

ANZ

“A move in unemployment below 4% is likely after the March data just rounded up to 4%. This will underscore how tight the labour market is, supporting our expectation that the acceleration in wages growth is really only just underway. And once higher wages growth is established, it typically takes a lot of rate hikes to bring it back down. This sets the backdrop for our continued expectation that a cash rate of 3%+ will ultimately be required.”

Westpac

“Our current forecast for employment in the April Labour Force Survey is +32K which we estimate to be a 0.3% rise in original (not seasonally adjusted) terms. We see the unemployment rate rounding down to 3.9%.”

TDS

“After the disruption from the floods, we think the April employment report is going to be robust (40K), which should reinforce our call for a 40bps hike at the June meeting.”

ING

“April unemployment in Australia is on track to reach its lowest-ever rate of 3.9%, as the number of unemployed people in the labour force is expected to dip slightly for a third consecutive month, while higher wages should also help deliver a mild uptick in total employment. This tightness in the labour market, coupled with comments from the Reserve Bank of Australia that their regional surveys are reporting higher wages growth, leads us to expect the wage price index growth rate for 1Q22 to come in close to 3% – in line with the RBA’s previous benchmark required for ‘sustained’ inflation. And that could set us up for another rate hike as soon as June.”

SocGen

“We expect the pace of increase in employment will pick up again in April, from 1.6% to 3.2% in terms of annualized growth, suggesting continued strength in the labour market recovery. We expect the unemployment rate to fall to a record-low level of below 4.0%, and we see the participation rate rising a little to reach a new record-high level, both of which would offer further proof of the extraordinary tightness of the current labour market conditions. Monthly hours worked would also rebound from the flood-driven dip in March.”

Citibank

“Australia April Labor Force Survey: Citi employment forecast; 38KK, Citi unemployment rate forecast; 3.9%, Previous; 4.0%, Citi participation rate forecast; 66.5%, Previous; 66.4%. The risk to the forecast is for a lower unemployment rate, possibly higher employment growth, and a lower participation rate than forecast. Overall, we expect this will put further pressure on the RBA to persist with its tightening cycle.”