Undeniable strength in the Australian labour market has dampened hopes of an interest rate cut before the end of this year.
Above-expectations job creation, an unemployment rate that’s tracking sideways and record-high workforce participation all point to a labour market that’s proving resistant to sluggish economic conditions.
The jobless rate held steady at 4.1 per cent in September, in line with the Australian Bureau of Statistics’ downward revision to the August outcome.
About 61,400 jobs were added to the economy in September, which was more than expected.
And they were mostly full-time appointments, reversing the part-time dominance seen in August.
Betashares chief economist David Bassanese said the report highlighted the ‘remarkable ability’ of the Australian economy to ‘keep finding employment for the still rapidly expanding supply of new workers’.
Reserve Bank governor Michele Bullock (above)
‘Low unemployment at a time of strongly rising labour supply suggests a good matching of worker skills with available employment opportunities – we are finding the workers for the available job opportunities, such as in the fast-growing care sector,’ he said in a client note.
Usually, a weaker labour market is the expected consequence of slowing the economy with higher interest rates to fight inflation.
The Betashares economist was predicting a February start to a new cycle of central bank interest rate cuts, based on the way the economy was unfolding.
‘Today’s employment report does not rule out rate cuts, though it does rule out near-term rate cuts due to an overly weak economy,’ he said.
Rather than being forced to start easing to support an ailing economy, he said, the Reserve Bank of Australia would be able to stay 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 cash rate meeting in November.
Commonwealth Bank is sticking to its December rate cut prediction, although economist Gareth Aird said Thursday’s jobs data did not strengthen that case.
‘Our call for the RBA to commence normalising the cash rate in December with a 25bp rate cut looks less likely as a result of (Thursday’s) jobs figures,’ he said in his latest update.
Despite the setback, the bank’s economic team remains of the view that inflation should cool fast enough for the central bank to cut at its final board meeting for 2024.
Undeniable strength in the Australian labour market has dampened hopes of an interest rate cut before the end of this year.
Employment Minister Murray Watt celebrated the creation of one million new jobs since the Albanese government took office.
‘What we’re managing to achieve at the moment, despite a slowing economy and despite worldwide tensions, is jobs up, inflation down, all while delivering cost-of-living relief and turning the big deficits 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 fell behind.
‘The Albanese government is all about increasing the size of the public sector, whilst attacking the private sector with red tape and uncertainty,’ she said.
