(Bloomberg) -- Australian employment rose 500 in June as a slide in part-time positions countered gains in full-time work.
Key Insights:
- Australia’s central bank just executed its first back-to-back interest-rate cuts in seven years as it redoubles efforts to drive unemployment down to 4.5%, the bank’s new estimate of the rate needed to reignite inflation
- In lowering the level seen as full employment, Reserve Bank Governor Philip Lowe is following in the footsteps of other developed-world counterparts, who’ve had to wait for their jobless rates to fall to exceptionally low levels to spur wage growth and even then it has proved a prolonged wait for it to feed into inflation
- Indeed, some economists expect Lowe will resume cutting later this year, seeing a terminal rate of 0.5%, compared with the current 1% level
- Pushing Australia’s jobless rate down to 4.5% is likely to prove an uphill battle. The nation’s debt-laden households have hunkered down and cut spending as they grapple with stagnant incomes and weakening house prices erode their wealth
- Australia’s labor market has held up surprisingly well even as the economy slowed sharply in the past 12 months. One explanation for the resilience is that much of the hiring is coming from government-related programs that are impervious to prevailing economic conditions
Market Reaction
- The Aussie dollar rose to 70.23 U.S. cents at 11:36 a.m. in Sydney from 70.14 pre-data