Australian jobs contract — the hawkish story loses a leg.
Written by
Oliver Summers
The print
Employment fell 15.8K against an expected gain of 11.7K. Unemployment rose to 4.5% from an expected 4.4%.
Why it matters
The hawkish AUD case had two legs: sticky inflation and a tight labour market. This print removes the second one. A contracting workforce with a rising unemployment rate is not the backdrop for a central bank leaning hawkish.
The case
Not a reversal — a downgrade. The inflation leg still stands, but conviction on the AUD side of any cross drops materially. Size accordingly. Where a position already exists, the honest response is to tighten the timed exit rather than add.
What would prove this wrong
A strong follow-up labour reading, or evidence the contraction is concentrated in part-time work with full-time employment still growing, restores the labour leg and this downgrade is wrong.