Daily Commentary BY THE CURVE TEAM –

Payrolls Underwhelm

26th of May, 2021

An indicator for employment shows a potential slowdown for May.

The high frequency payrolls data are considered a more volatile index than the labour force data that is released monthly. For the period from 24 April to May 8, payrolls were down 0.5% and wages fell 1.3%.

JobKeeper has clearly had an impact on the data. Notable industries acutely affected by covid, including accommodation and food services, arts and recreation as well as other services have declined the most since the end of JobKeeper.

Seasonal factors may still be affecting the data, with the survey period still near the holiday period. Payrolls also remain above pre pandemic levels.

Regardless, should the move down in payrolls be accurate, then it will likely flow to the labour force data for May. This is significant as a softening employment outlook despite high job vacancies and strong business surveys will influence the RBA’s decision on yield curve control and QE.

It will be harder to justify a tightening of policy by unwinding yield curve control and QE if the employment outlook has deteriorated.

Josh Stewart

Associate - Money Markets