The undeniable strength in the Australian labor market has dampened hopes of a rate cut before the end of this year.
Above-expected job creation, an unemployment rate that is moving sideways, and record-high labor force participation all point to a labor market that is proving resilient to sluggish economic conditions.
The unemployment rate remained stable at 4.1 percent in September, in line with the Australian Bureau of Statistics’ downward revision to the August outcome.
In September, the economy added about 61,400 jobs, which was more than expected.
And they were mainly full-time appointments, reversing the part-time dominance of August.
Betashares chief economist David Bassanese said the report highlights the Australian economy’s “remarkable ability” to “continue to find employment for the still rapidly growing supply of new workers”.
Reserve Bank Governor Michele Bullock (above)
“Low unemployment at a time of sharply increasing labor supply indicates a good match between workers’ skills and available employment – we find the workers for the available jobs, such as in the fast-growing healthcare sector,” he said in a client call. remark.
Normally, a weaker labor market is the expected consequence of slowing the economy with higher interest rates to combat inflation.
The Betashares economist predicted in February the start of a new cycle of interest rate cuts by central banks, based on the way the economy was developing.
“Today’s employment report does not rule out rate cuts, but it does rule out near-term rate cuts due to an economy that is too weak,” he said.
Rather than being forced into easing to prop up an ailing economy, he said the Reserve Bank of Australia could remain laser-focused on inflation.
The September quarter consumer price index, due at the end of the month, would be the key data point heading into the next spot rate meeting in November.
The Commonwealth Bank is sticking to its rate cut forecast for December, although economist Gareth Aird said Thursday’s employment data did not strengthen that argument.
“Our call for the RBA to begin normalizing cash rates in December with a 25 basis point rate cut appears less likely due to the employment data (Thursday),” he said in his latest update.
Despite the setback, the bank’s economic team remains of the view that inflation should cool quickly enough for the central bank to make cuts at its final board meeting before 2024.
The undeniable strength in the Australian labor market has dampened hopes of a rate cut before the end of this year.
Employment Minister Murray Watt celebrated the creation of one million new jobs since the Albanian government took office.
“What we are achieving right now, despite a slowing economy and despite global tensions, is to increase the number of jobs and reduce inflation, while at the same time easing the cost of living and turning the large shortages into labor surpluses,” he told reporters. on Thursday.
Opposition employment spokesperson Michaelia Cash said new job creation was dominated by the public sector, while the private sector was lagging behind.
“The Albanian government wants to increase the size of the public sector, while attacking the private sector with red tape and uncertainty,” she said.
