According to Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities, the August employment report of Australia was positive on the headline with 34.7k jobs added in the month, but the internals were soft.
“The headline print was above the market (+15k) and TD’s (+25k) forecast thanks to +50.2k part-time jobs added in the month.”
“The participation rate rose to a record high 66.2% and while the unemployment rate was essentially unchanged (from 5.24% to 5.25%) it was rounded up to 5.3%.”
“However the underemployment rate edged up +0.1% and after rounding the underemployment rate jumped from 8.4% in July to 8.6% in August.”
“This takes the underutilisation rate from 13.6% in July to 13.8% in August and considering this was at 13% in Feb, spare capacity is clearly on the rise.”
“The miss on GDP, the dovish tilt to the Sep Minutes this week and the steady rise in spare capacity suggest there is little need for the RBA to wait till Nov.”
“Accordingly TD brings forward its Nov 25bps cut to 0.75% to Oct. We leave our 0.5% cash rate call for Q2 next year unchanged from prior forecasts.”