The June employment report has nicely set up the RBA to cut rates at their August meeting, so long as the Q2 CPI report is around (or below) their forecast of ~0.65%q/q. Given that global CPI pressures were very weak in Q2 this seems very likely.
The report itself was fairly unsurprising — but it’s important as it confirms that the uptrend in the unemployment rate continues. This month, the seasonally adjusted estimate rose 18bps to 5.73%. I normally eschew second decimal accuracy with this report as it’s mostly noise, however ~20bps is around the threshold where we can be sure the unemployment rate has increased (the 95% range on the change is 0bps to +40bps).
Those who want to put a gloss on the report might emphasise the employment numbers (though it’s not really what the report is designed to measure): overall employment rose 10.3k, thanks to a 14.8k increase in part-time employment offsetting a 4.4k drop in full-time employment.
The part-time / full-time movement from month to month is mostly noise. The big picture remains a slow uptrend in total employment, which is too slow to stop the unemployment rate from rising.
If we re-express the above chart to take out the impact of population growth (so we look at the change at the proportion of the population in either class of work) you can see that FT work is not keeping up with population growth; part-time jobs are growing at a similar pace to the population, leading to a slow decrease in the proportion of the population in work.
If anything, trends suggest labour market weakness is increasing, following a period where labour market weakness was ebbing (which I guess means there is no long-term trend … it’s just sideways at too weak). Both employment and hours worked trends are turning down again.
There’s not much change to employment to population measures: male n-pop is around the cycle low, and below the GFC low. I am getting a bit more open-minded about the possibility that structural change is depressing participation rates — which means that looking at the n-pop rate to gauge spare capacity may be misleading, though it’s too low just now for that to really matter.
Again, here the big picture is of widening spare capacity in the labour market. Given this increase in spare capacity, and a low Q2 CPI report, my guess is that the RBA board will judge that the inflation outlook does accord scope for further easing (assuming I am right about Q2 CPI being ~0.5%q/q, of course), and that they will use 25bps of that scope at their August meeting.