Australia’s economy added more jobs than expected last month as the unemployment rate remained steady, making an early Reserve Bank interest rate cut less likely.
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% reported by the ABS four weeks ago.
Employers added a net 47,500 jobs last month compared with the 26,000 economists had predicted. In July, the economy added 58,200, prior to any revision. Of the added jobs, more than 50,000 were part time, with 3,100 full-time roles shed.
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 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 making its first reduction in four years overnight. Weakening employment figures in Australia would be one signal for the RBA to sharpen its rate cut axe.
Prior to today’s figures, financial markets were betting the RBA would leave its cash rate unchanged at its two-day board meeting next Monday and Tuesday. Investors were only fully pricing in the first 25 basis point to 4.1% by February, according to the ASX.
More to follow …
