What to expect from Australian labour market report

Australia's surprisingly strong run of employment growth is expected to have drawn to an end in December, though the labour market is still undoubtedly stronger than most policymakers anticipated it would be at this stage of the mining downturn.

Net job growth is forecast to decline by 11,000 in December, pushing the unemployment rate back up from the one-and-a-half year low of 5.8% in November to 5.9% last month.

However, Australia's labour data has been extremely unpredictable over the last few months. In November the consensus forecast was for a 10,000 drop in employment, whereas job growth actually surged by 71,400, while October delivered a 56,100 boost in jobs, compared with the market forecast of a 14,800 lift.

With the labour market doing better over recent quarters, pressure has eased for the Reserve Bank of Australia (RBA) to continue cutting interest rates.

Almost a year ago the RBA had forecast a peak unemployment rate of around 6.5%, but now the central bank is expecting the jobless rate to hold around 6.0-6.25% over the next year, according to the November Statement on Monetary Policy.

With the unemployment rate already below where the bank had forecast just two months ago there is little chance of near-term easing.

The market is pricing in just a 17% chance of a 25 basis points rate cut at the RBA's February meeting.