Jobless numbers will keep Reserve Bank’s focus homes on ‘full employment’

After a week of expressing the need to get back to full employment, Reserve Bank governor Philip Lowe will soon see how Australia is progressing on that target.

June labour force figures are released on Thursday, and at least one economist is predicting the unemployment rate could be sub-five per cent for the first time in a decade.

Announcing the central bank’s latest interest rate decision, Dr Lowe said he believes full employment can be regarded in effect when the jobless rate is close to four per cent, possibly lower.

For the June result, economists’ forecasts centre on the unemployment rate being unchanged from May at 5.1 per cent. However, predictions range from 4.9 per cent to 5.2 per cent.

The number of people employed is expected to have grown by a further 20,000 in the month, but again forecasts range from a 45,000 rise to a 25,000 fall.

Westpac economists say the labour force report would have been conducted before the NSW COVID-19 lockdown set in.

The first part of this week will see a spread of confidence figures for both consumers and business, and coming at a time of great uncertainty as a result of the Greater Sydney COVID-19 lockdown, now in its third week.

The weekly ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – is due on Tuesday.

It fell 3.9 per cent last week in response to virus restrictions in several states.
On the same day, National Australia Bank will release its monthly business survey for June, which provides a guide for potential hiring and investment.

In May, business confidence index eased from a record high, but conditions struck a new peak for a second month in a row.

‘Conditions so strong’

“Recent virus lockdowns could weigh on sentiment in June,” Commonwealth Securities senior economist Ryan Felsman said.

“But with conditions so strong, investors will be closely assessing the June survey for signs of stress, such as shortages of labour and materials as well as pricing pressures.”

Other recent surveys have shown that employers in manufacturing, construction and services are finding it increasingly difficult to obtain appropriate staff, while the cost of doing business is increasing.

The monthly Westpac-Melbourne Institute sentiment index is due on Wednesday.

Meanwhile, Australian shares look set for a sharp rise at Monday’s opening despite the shadow of the NSW virus lockdown that recorded one death amid 77 new cases reported on Sunday.

Australian share futures surged 76 points, or 1.05 per cent, to 7262 as the three major indices on Wall Street closed at record highs on Friday.

The big US banks led the advance ahead of second-quarter results this week, shaking off worries earlier in the week that the US economic recovery may be losing steam as the coronavirus Delta variant spreads globally.

The Australian market did succumb to Delta strain worries on Friday, but ended above the day’s lows.

The benchmark S&P/ASX200 index closed down 68.1 points, or 0.93 per cent, to 7273.3.

-AAP

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