AUD: Employment lacking in good news or credibility - TDS

Research Team at TDS, notes that the Australia’s employment in October rose by +9.8k (TD +40k, mkt +16k, Sep slashed to –29k) via an outsized +41.6k leap in full-time employment.

Key Quotes

“The participation rate slumped to 64.4% in September (revised) and remained there in October, and the unemployment rate remained at a “low” 5.6%.”

“We expected seasonal upside, but was only partially correct: raw Oct employment was +41k (2015 +93k and 2009-14 ave was –45k). What we didn’t expect was the drastic downward revision to Sep. The ABS has revised down prior Sep outcomes for the last few years, while Oct has been revised up. What we conclude from this exercise is that we now look for a minimal +10k upward revision to this October employment outcome when the November report is released next month.”

“The market’s initial reaction was the response to the full-time employment jump. However, this was short-lived as this report’s underbelly is ridiculously soft, so AUD is now heavy at $US0.748 and 3yr yields now 3-4bp lower at 1.787%.”

“The RBA is unlikely to interpret a 2½ year low in the unemployment rate as a sign of labour market strength.”