2023-09-14 07:51:00
Australia’s employment jumped in August, while the participation rate hit a record high and the unemployment rate held steady, a sign that decade-long high interest rates have yet to ease demand in a very tight labor market.
Although Thursday’s strong jobs figures were driven mainly by part-time positions and did not dramatically change the outlook for monetary policy, they come amid a heated debate over wages and worker productivity , with an unemployment rate close to its lowest levels in five decades.
Data from the Australian Bureau of Statistics showed net employment increased by 64,900 in August compared with July, when it fell by 1,400 in upwardly adjusted terms. Market forecasts were for an increase of around 23,000.
The unemployment rate remained stable at 3.7%, matching analysts’ forecasts, while the participation rate jumped to 67.0%, the highest since records began in 2013.
“Leading indicators point to a very strong jobs report, but the bias towards predominant part-time employment should temper exuberance,” said Dwyfor Evans, head of APAC macro strategy at State Street Global Markets.
“There is not much that can move the central bank.
The Australian dollar briefly broke above $0.6450 following the data was released, before losing its gains and rallying back to $0.6442. Markets continued to bet that the Reserve Bank of Australia (RBA) would hold rates on hold next month, with around a 40% chance of making a final hike early next year.
The labor market proved remarkably resilient, with 410,700 net jobs created in the 12 months to August, even as interest rates rose 400 basis points to 4.1%. , their highest level in 11 years.
SALARIES, PRODUCTIVITY
These strong figures show Australia’s jobs market remains extremely tight more than a year and a half following the economy shook off COVID-era border restrictions.
This has exacerbated tensions between businesses, which are calling on migrants to fill persistent labor shortages, and workers, who stress that soaring inflation is impacting real wages.
The debate over wages and productivity intensified this week following Australian property developer Tim Gurner complained at a business forum that the pandemic had changed employees’ work ethic and “we need to see the pain in the economy” and that unemployment would need to rise by 40-50% to adjust expectations.
Video of his comments, posted by the Australian Financial Review on social media platform X, has been viewed more than 23 million times and sparked an outcry in Australia and abroad.
While some in the industry agreed with Mr. Gurner’s comments, others, like U.S. lawmaker Alexandria Ocasio-Cortez, highlighted the growing gap between executive and employee pay.
On Thursday, Treasurer Jim Chalmers welcomed the strong jobs report but warned that the labor market might slow down from here, a view that has consensus among economists.
“High interest rates, high but moderate inflation and continued global uncertainty – particularly the slowdown in China – will inevitably weigh on our economy and labor market in the year ahead,” said Mr. Chalmers.
The RBA forecasts the unemployment rate will reach 3.9% by the end of the year and 4.5% by mid-2025.
Adam Boyton, head of Australian research at ANZ, is already seeing signs of a slowdown in the labor market, with underemployment rates rising and hours worked falling.
“Despite the jump in overall employment, we believe the August labor force survey as a whole is not much different from our general expectations,” Mr. Boyton said.
“Therefore, the RBA’s view does not change as a result of this data, we see the Bank Rate held at 4.1% for some time.
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