(Bloomberg) -- Australia’s labor market continued to defy gravity in July, adding almost three times the forecast number of jobs, while unemployment remained unchanged as the labor force swelled further.
Key Insights:
- Job gains were led by Queensland, New South Wales and Victoria; the underemployment and underutilization rates both increased 0.2 percentage point to 8.4% and 13.6% respectively
- Australia’s labor market has held up surprisingly well even as the economy slowed sharply since mid-2018. One explanation is that much of the hiring is from government-related programs that are impervious to prevailing economic conditions
- The central bank executed its first back-to-back interest-rate cuts in seven years in June and July as it redoubles efforts to drive unemployment down toward 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
- Money markets are predicting further reductions from the current 1% cash rate; indeed the RBA, in its quarterly update of economic forecasts released Friday, used market pricing for a further two cuts -- to 0.5% -- as the basis for its growth and inflation estimates
- 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
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or
remove ads
.
- The Aussie dollar rose to 67.72 U.S. cents at 11:49 a.m. in Sydney from 67.58 pre-data; it climbed as high as 67.88 on the report