Jobs growth may be slowing, but is it enough to change the RBA's mind?

“It’s jobs, stupid,” to paraphrase Bill Clinton — and this week’s employment data may prove pivotal in the debate over where interest rates should be heading.

The week in finance:February labour force figures (Thursday) expected to show unemployment at 5pc and 15,000 job addedNufarm (Wednesday) and Sigma Healthcare (Thursday) release resultsUS and EU manufacturing surveys (Friday) will give insights in the global economy

Continued jobs growth eroding unemployment and pushing up wages is central to the Reserve Bank’s belief it does not need to cut rates.

Those pushing for cuts believe the jobs boom is about to crack under the weight of a mass of signals pointing to a broadening economic slowdown.

A weak set of numbers on Thursday could well see the market price in two rate cuts this year (currently the betting is one) and more pressure on the RBA to shift its neutral stance.

So far the RBA’s conviction has partially held true.

Jobs have continually been added at a fairly brisk pace.

However, the unemployment rate can’t seem to dive under 5 per cent, down into a range capable of firing up wages growth.

January’s barnstorming 39,000 new jobs easily beat the market consensus and they were good quality jobs — more than 65,000 full-time, while there was a net loss of part-time work.

Employment has grown by 2.2 per cent — or around 270,000 jobs — over the past year.

External Link: Employment and unemployment

The market has again gone with what appears to be its default position for the monthly labour force data; 15,000 new jobs and unemployment holding at 5 per cent.

Westpac has split from the pack, suggesting jobs will be shed, although this has more to do with volatility than a major capitulation.

“The leading

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