Employment Holds Steady Amid Rate Speculation

Employment Holds Steady Amid Rate Speculation

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Australia's unemployment rate remained fixed at 4.1% this October, marking the third consecutive month without change, according to newly released Australian Bureau of Statistics data.

Despite this steady figure, the growth of new jobs appears to be waning.

With approximately 16,000 Australians entering employment last month, industry experts have suggested that this data will likely encourage the Reserve Bank of Australia (RBA) to delay any reductions in interest rates. Notably, economists from HSBC and financial firm VanEck have asserted that the RBA has fewer reasons to hasten their rate easing timeline.

Cameron McCormack, a portfolio manager at VanEck, interpreted the figures as indicative of a "robust jobs market." He warned, "The strength in the labour market continues to exert upward pressure on already elevated services inflation," complicating efforts to align inflation with the RBA's target range of 2 to 3%.

Meanwhile, My Bui from AMP articulated that the month's job growth was lackluster by recent standards, with Bjorn Jarvis of the ABS noting, "This was lower than each of the previous six months, when employment rose by an average of 0.3% per month."

Treasurer Jim Chalmers emphasized that while job creation remains robust and inflation declines, signs of deceleration are evident. "Our labour market has remained resilient to date," Chalmers remarked, "but it is softening around the edges with more modest employment growth last month."

Amid global economic uncertainty, rising costs, and increasing interest rates, Chalmers reassured Australians that the government's focus is on "easing the cost of living, getting more people into work, and helping Australians earn more and keep more of what they earn."

These remarks surface against a backdrop of impressive job creation up to September, with around 430,000 roles reported as being filled this past year—a fact that has drawn the attention of the RBA. Governor Michele Bullock has recognized the paradox of a vigorous labour market paired with high service-sector inflation.

Furthermore, a press release from The Nightly disclosed that while the RBA cautioned against a hike, it maintained assurance that Australians would not be "tossed out of their jobs" as market adjustments take place naturally over time.

This employment update coincides with news of Australian wage growth at 3.5% year-over-year up to September—slower than the 4.1% noted previously in June. Yet, since wages have outstripped inflation, there's an uptick in workers' purchasing power, a rare occurrence amid global economies.

Financial markets, as noted in overnight analyses, reflect only a 12% expectation of rate relief during the RBA's forthcoming December discussions. This forms part of broader monetary strategies amid uncertain economic climates.

Published:Friday, 15th Nov 2024
Source: Paige Estritori

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