Australian Unemployment Steady, Supports Cautious RBA Stance
Australian unemployment held steady last month even as the economy shed jobs with fewer people looking for work, signaling the labor market remains tight and reinforcing the Reserve Bank’s cautious approach to policy easing.
The jobless rate was unchanged at 4.2% in August, matching economists’ forecasts, data from the Australian Bureau of Statistics showed Thursday. Employment fell by 5,400 driven entirely by full-time roles. Part-time work jumped 35,500.
The Australian dollar and yields on policy-sensitive three-year government bonds both fell. Traders expect the RBA’s rate-setting board to leave interest rates on hold at 3.6% this month after three cuts this year, with a fourth reduction seen more likely in November.
“Hours worked fell 0.4% in August, supported by less people working full-time hours this month,” ABS Head of Labor Statistics Sean Crick said in a statement.
Jobs data is crucial for the RBA’s rate-setting board as the resilience of the labor market, and worries about it rekindling price pressures, have been among factors driving a cautious approach in the current easing cycle.
Governor Michele Bullock has signaled a “couple more” cuts will be required to achieve the RBA’s latest forecasts. Assistant Governor Sarah Hunter said earlier this week that the economy is close to full employment.
Australia’s labor market has been a bright spot in the economy, though there are some recent signs of slowing — recruitment activity has come off, and the rate of job switching has eased more rapidly than other labor market indicators. That suggests workers aren’t shifting jobs in search of higher pay at the same pace, typically due to less confidence about demand.
Global uncertainty is also elevated with the outlook clouded by the Trump administration’s protectionist policies, heightened geopolitical tension and a slowdown in Chinese demand.
The RBA will have a monthly CPI indicator due next week, ahead of its September meeting, though Hunter cautioned that the series is volatile and doesn’t provide a clear reading of price changes.
Thursday’s jobs report also showed:
The participation rate decreased to 66.8% from 67% in July
Full-time roles fell by 40,900, while part-time positions jumped by 35,500
Underemployment fell by 0.1 percentage points to 5.7% in August. Underutilization slipped to 9.9%
Employment-to-population ratio decreased to 64.0%
Source : Bloomberg.com
