The other key number of watch out for will be the participation rate, which has been rising since the pandemic-lows, and saw gains to 62.8% in August from 62.6% prior. As household budgets get stretched and credit cards get maxed out, more of the voluntary retirees could be looking to return to labor force. Jump in participation rate could help to boost the headline job growth while also potentially lowering the unemployment rate, but this can be a misleading sign. In addition, the effect of UAW strikes may not show up in the jobs report yet, but remains a drag for Q4.
Antipodeans: Growth divergence in focus
Both the RBA and RBNZ meetings this week ended in no changes to cash rate and continuation of the data-dependent mode. The tone from Australia’s new governor, Michele Bullock, was one of conviction that inflation will return to target. Australia’s economy is also losing stream, with retail sales plunging and consumer confidence taking a hit as labor market cools. Meanwhile, China story continues to remain underwhelming, providing little comfort for AUD. As global risk sentiment takes a hit, either because of the rapid sell-off in bond markets, or due to the concerns around the fallout from the high real rates, there remain little reasons to be optimistic on AUD in the short-run. Headline inflation could, however, see a bump higher due to the gasoline prices and the quarterly print due at the end of October could see some additional pricing for the RBA rate hike, but global sentiment will likely remain more of a factor.
RBNZ statement was also less hawkish than expected, and the bar for an additional rate hike will likely remain high. However, higher-for-longer could stick longer for the RBNZ compared to RBA, given NZ’s Q2 GDP witnessed a strong expansion. Terms of trade comparison between the antipodean currencies is shown in the chart below, and also suggests that improving NZ terms of trade could be a positive for NZD vs. other commodity currencies.