The latest Australian job numbers, to be released on Thursday, will be closely scrutinized to assess whether the surprising job losses in July have been recovered in August and to what extent.
The Australian Bureau of Statistics (ABS) reported that in July, the jobless rate rose to 3.75% following a 35,600 increase in unemployment and a 14,600 decrease in the number of people unemployed. However, this marked the third occurrence of such events this year, and subsequent strong gains in the following month compensated for the earlier losses.
The ABS cautioned that this decline should be viewed in context, emphasizing that "July includes the school holidays, and we continue to see some changes in when people take their leave and start or leave a job." It's essential to consider this when analyzing month-to-month changes, particularly compared to the standard seasonal pattern. The only other employment decline in 2023 occurred in April, which also encompassed school holidays.
With a market forecast of 15,000 new jobs in August but a steady jobless rate at 3.7%, it is expected that the July losses will be recovered, although the higher jobless rate might persist for some time.
Nonetheless, this still reflects a robust job market. If this scenario materializes in Thursday's labor force report, there is an explanation provided by the National Australia Bank's August survey of business conditions and confidence.
The NAB confirmed the economy's resilience during the three months leading up to June, which carried over into July and possibly solidified further in August. Business confidence increased by 2 points in August, while business conditions strengthened by 3 points to reach +13 index points.
The NAB noted that this continued "a streak of resilience throughout the middle of the year, with conditions remaining well above average despite the broader economic slowdown." Key indicators such as trading conditions, profitability, and employment all saw improvements, with overall conditions showing an upward trend across most industries. Capacity utilization also rebounded, surpassing 85%. While confidence and forward orders indicators improved, they still remained below average due to substantial negatives in the retail sector.
The results pointed to car retailing and personal & household goods as drivers of this trend, partially due to normalizing order books as backlogs were cleared. Cost and price growth measures remained elevated, with labor cost growth moderating from the spike observed in July but still at a high of 3.2% in quarterly equivalent terms. Purchase cost growth also persisted at 2.9% for the month. Output price growth remained high at 1.7%, well above the recent low of 1% in June. Although growth in retail and services prices moderated slightly, they remained elevated.
Considering the recent National Accounts release, which indicated subdued but positive GDP growth through Q2, the NAB's survey results for August suggest that the economy has maintained its resilience into Q3.