(Bloomberg) — Australia’s strong hiring extended into August and the unemployment rate held steady, underscoring the resilience of the labor market to elevated interest rates.
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Employment rose 47,500 — driven by part-time jobs — versus a forecast 26,000 gain, government data showed Thursday. The jobless rate was unchanged at 4.2%, while the participation rate held at a record high.
The Australian dollar erased an earlier loss while the yield on policy sensitive three-year government notes extended gains as traders see diminishing chances of a Reserve Bank rate cut this year. Market pricing for an easing by December fell to about a two-in-three chance from around 80% earlier Thursday.
“The slow weakening we’ve seen is still just that, slow,” said Philip Brown, head of research at FIIG Securities in Melbourne, adding that the report is entirely consistent with the central bank’s employment outlook. “The RBA doesn’t look like they intend to cut and they won’t see anything in this data to change their mind.”
The report comes days before the RBA is widely expected to leave its key rate at a 12-year high of 4.35% and maintain its hawkish rhetoric. Money markets and economists reckon the RBA’s next move will be a cut.
Governor Michele Bullock has all-but ruled out rate cuts in the near-term and describes the RBA’s current policy settings as restrictive. She will have an opportunity to share her views on the employment data, among other issues, at a press conference after Tuesday’s policy announcement.
“The RBA is likely to maintain a tightening bias until they see sufficient progress with regards to service sector inflation and a considerable pick-up in productivity growth. Not enough progress has been made on that front,” said Callam Pickering, APAC economist at global job site Indeed Inc.
Thursday’s report also showed:
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Annual jobs growth eased to 2.7% in August from 3.2% a year earlier
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Full time roles fell by 3,100 while part-time surged 50,600
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The employment-to-population ratio rose to 64.3%, just shy of a record high set in November last year
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Underemployment edged up 0.1 point to 6.5%
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Hours worked rose 0.2% from a month earlier
“The high employment-to-population ratio and participation rate shows that there are still large numbers of people entering the labor force and finding work, as employers continue to look to fill a more than usual number of job vacancies,” said Kate Lamb, ABS head of labor statistics.
–With assistance from Matthew Burgess.
(Adds market reaction, comments from analysts.)
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