Employers hired almost 65,000 more workers in August, many more than expected, improving the prospects that the economy will avoid a hard landing but also raising the possibility the Reserve Bank may hike interest rates again.
The unemployment rate last month was 3.7%, the Australian Bureau of Statistics said on Thursday. Economists had forecast the economy would add 25,000 jobs in August, which would have left the jobless rate at July’s reported level of 3.7%.
Of the 64,900 extra jobs recorded in August, all but 2,800 of them were part-time roles. Hours worked fell 0.5% but remained 3.7% higher than a year earlier.
Those looking for work increased 0.1 percentage point from a revised 66.9% in July, a lift that contributed to the jobless rate remaining unchanged despite the jump in jobs.
“The participation rate also increased, up to a record high of 67% in August, which, together with the high employment-to-population ratio [of 64.5%], continues to reflect a tight labour market,” Bjorn Jarvis, ABS head of labour statistics, said.
The labour market has been surprisingly resilient for several years, with the jobless rate touching 3.4% in July and October 2022, near half-century lows.
The treasurer, Jim Chalmers, welcomed the August jobs figures as “a tremendous result and a testament to the resilience of the Australian economy and the Australian people”.
Chalmers said the tally of new jobs since the Albanese government had come to power was now at 550,000, or the most by any new government.
Still, high interest rates, high but moderating inflation and continuing global uncertainty, particularly over China’s slowdown, “would inevitably weigh on our economy and our labour market in the year ahead”, he said.
The RBA’s latest forecast has the unemployment rate rising to 4% by December and 4.5% by the end of 2024 as impacts of 12 interest rates since May 2022 are felt.
Prior to the release of the jobs data, most economists had been predicting interest rates would remain on hold well into next year.
The initial market reaction was modest, with the dollar hovering around 64.4 US cents and stocks retaining their gains for the day of about 0.25%.
“Today’s data shows that further RBA rate rises in the coming months cannot be completely discounted,” said Michael Malakellis, KPMG senior economist. “A key to this is whether the tightness in the labour market continues to put upward pressure on wages and whether there is a compensating increase in labour productivity.
Adam Boyton, head of Australian economics for ANZ, however, said the headline jobs gains masked a “more mixed” picture, including the drop in hours worked.
“Yes, the labour market is still very solid but slack is creeping in (witness the increase in the underemployment rate to 6.6% in August from 6.4% in July),” Boyton said. As a result, ANZ was sticking with its view the RBA would stay put “for quite some time”.
Among the states and territories, New South Wales recorded a second big jump in the jobless rate in as many months. After boasting a 2.9% rate in June, the tally has increased 0.7 percentage points since to 3.6%, seasonally adjusted.
The slack, though, was taken up by Queensland, where the unemployment rate improved from 4.5% to 4.1%. Victoria’s edged 0.1 percentage points lower to 3.5%, while the ACT’s 3.1% rate – down from 3.8% in July – was the lowest in the nation. Meanwhile, Western Australia’s worsened to 3.8% from 3.4% in July. The labour market rankings among states and territories continues its recent shift, with New South Wales in particular showing a sharp reversal.
Separate data from the ABS, meanwhile, showed the number of work days lost to industrial disputes picked up about a third in the June quarter to 10,200.
However, for the year to June, the total days lost of 67,100 was barely a quarter of the 234,600 lost in previous 12 months, the ABS said.
