Australia's employment growth to be steady in July

Australia's unemployment rate for July is expected to release on 6th August. The Australian labor market has performed well through the last quarter of 2014 and through the first half of 2015 despite the undisputed weakness of domestic demand growth.

Employment growth has steadily increased from less than 1% in the first three quarters of 2014 to 1.2% in Q4, 1.6% in Q1 and 1.8% in Q2, which is above the growth rate of the working age population (1.7%). This kind of pattern is expected to persist, which reflects the shift away from mining investment- which is not labor-intensive - to activities which are far more labour intensive such as services, and services exports in particular. 

"Shift in investment to the labor intensive activities, the employment growth in July is likely to be on the soft side of this trend, given exceptionally strong gains in Q4 of last year and in Q1 of this year, but we regard this as part of the normal volatility of this series. Our 12k forecast for jobs growth is equivalent to an annualized rate of 1.2%, and would thus not be sufficient to maintain the unemployment rate  at its June level: we expect a small increase of 0.1pp to 6.1%, assuming unchanged participation", says Societe Generale in a report on Monday.