Australia’s economy added more jobs than expected in August as the unemployment rate remained steady, making a Reserve Bank interest rate cut less likely in the short term.
The jobless rate in August was 4.2%, the Australian Bureau of Statistics reported on Thursday. Economists had it expected it to remain in line with the 4.2% in July.
Employers added a net 47,500 jobs last month compared with the 26,000 economists had predicted. Of the added jobs, more than 50,000 were part time, with 3,100 full-time roles shed.
Signs of strength in the job market included a 0.4% increase in the number of hours worked to 1.962bn, said Kate Lamb, head of labour statistics at the ABS.
“The proportion of people working reduced hours because they were sick continues to be above pre-pandemic levels,” Lamb said.
“However, the proportion of people working less hours than usual due to economic reasons, such as no work or less work available, is below pre-pandemic levels, which points to continued relative tightness in the labour market.”
The participation rate, one measure of the share of the population in work or looking for employment, remained at its record level of 67.1%.
“The economy is soft and people are under pressure and that’s why we are pleased to see we are still creating jobs and opportunities for more Australians than ever,” the treasurer, Jim Chalmers, said in a statement.
The Albanese government revised its previous estimates that it was close to ticking past the mark of 1m new jobs since taking office in May 2022. It now puts the gain at almost 978,000.
The labour market will be a key gauge of whether the economy remains aloft after 13 RBA interest rate hikes or suffers a hard stall, as happened after previous bursts of inflation.
The central bank last week indicated that it viewed current conditions to be “above” full employment with jobless rate needing to rise to ensure inflation’s retreat continued.
However, most rich nations are now cutting interest rates, including the US Federal Reserve, which made its first reduction in four years on Wednesday. Weakening employment figures in Australia would be one signal for the RBA to sharpen its rate cut axe.
Prior to Thursday’s figures, financial markets were betting the RBA would leave its cash rate unchanged at its two-day board meeting next week on Monday and Tuesday. Investors were only expecting the first 25 basis point cut to 4.1% by February, according to the ASX.
After the release of the jobs data, the Australian dollar remained steady near 67.5 US cents, while the ASX200 benchmark share index was also little moved to be flat for the day.
Brendan Rynne, KPMG’s chief economist, said the latest data “once again shows the resilience of the Australian labour market despite a slowing economy”.
“Next week’s monthly CPI data should show inflation falling, but it is still KPMG’s expectation that the RBA won’t start to cut the cash rate until early next year, when inflation is expected to be safely within the [2%-3%] target band,” Rynne said.
Separately, the latest ACCI/Westpac business survey, released on Thursday, found “a net 13.1% of respondents indicated that labour was more ‘difficult to find’ in the September quarter, a modest increase from the net 11.7% in Q2”.
Among the major states, New South Wales’s jobless rate crept up to 4.1% from 4.0% in July. Queensland, which goes to the polls next month, saw its unemployment rate ease 0.1 percentage points to 4.2%, with Victoria posting a similar improvement to 4.5%.
Western Australia, South Australia and the ACT all posted jobless rates of 3.9% in August, the lowest in the nation.
Australia’s jobless rate compares with the UK’s 4.1% and New Zealand’s at 4.6%, both in June. The European Union’s was a hefty 6.4% (in July) and Canada’s 6.4% (in August), according to The Economist.
