Beyond high short-term volatility, Australia's labour market is quite firm

July's labour market report surprised in just about every aspect, with large moves in all key measures. August report is expected to reverse a substantial part of these changes. Employment, which surged 38.5k (equivalent to an annualised rate of 4.0%), is likely to have declined: a 12k decrease is expected, which would leave the Q4 figure on course for an annualised gain of 1.9%. 

August's employment level would be up 2.0% yoy, down from 2.1% in July. Despite the decline in employment unemployment is expected to have eased as well, as part of the 79k surge in the measured labour force reverses. Note that the underlying civil population 15-years and older is growing at just 16k per month at current rates of participation, so this was really an expansion of epic proportions. The participation rate would thus reverse 0.25pp of the 0.32pp increase in July. This would allow the unemployment rate to decline from 6.3% (6.349% unrounded) to 6.2%, supporting the view that the trend in unemployment has indeed stabilised.