The undeniable strength of the Australian labor market has dashed hopes of an interest rate cut by Christmas.
Above-expected job creation, an unemployment rate that is moving sideways, and record labor participation all point to a labor market that is proving resilient to sluggish economic conditions.
The unemployment rate held steady at 4.1 per cent in September, in line with the Australian Bureau of Statistics’ downward revision to the August result.
About 61,400 jobs were added to the economy in September, more than expected.
And they were mostly full-time appointments, reversing the dominance of part-time work seen in August.
Betashares chief economist David Bassanese said the report highlighted the “remarkable ability” of the Australian economy to “continue to find employment for the still rapidly expanding supply of new workers”.
Reserve Bank Governor Michele Bullock (above)
“Low unemployment at a time of strong growth in labor supply suggests a good match of workers’ skills to available employment opportunities; we are finding workers for available job opportunities, such as in the fast-growing care sector” said one customer. note.
Typically, a weaker labor market is the expected consequence of slowing the economy with higher interest rates to combat inflation.
The Betashares economist predicted that a new cycle of central bank interest rate cuts would begin in February, based on the way the economy was developing.
“Today’s jobs report does not rule out rate cuts, although it does rule out near-term rate cuts due to an overly weak economy,” he said.
Rather than being forced to start easing its policies to support an ailing economy, he said, the Reserve Bank of Australia could stay focused on inflation.
The September quarter consumer price index, due out at the end of the month, would be the key data ahead of the next cash rates meeting in November.
The Commonwealth Bank is sticking to its December rate cut prediction, although economist Gareth Aird said Thursday’s jobs data did not strengthen that argument.
“Our call for the RBA to begin normalizing the cash rate in December with a 25 basis point cut looks less likely as a result of (Thursday’s) jobs numbers,” he said in his latest update.
Despite the setback, the bank’s economic team remains of the view that inflation should cool quickly enough for the central bank to make cuts at its last board meeting in 2024.
The undeniable strength of the Australian labor market has dashed hopes of an interest rate cut before the end of this year.
Employment Minister Murray Watt hailed the creation of one million new jobs since the Albanian government took office.
“What we are achieving right now, despite a slowing economy and despite global tensions, is increasing employment and lowering inflation, all while providing cost-of-living relief and turning large deficits into labor surpluses. “he told reporters. on Thursday.
Opposition employment spokesperson Michaelia Cash said new job creation was dominated by the public sector, while the private sector lagged behind.
“The Albanian government intends to increase the size of the public sector, while attacking the private sector with bureaucracy and uncertainty,” he said.
CBA is the only Big Four bank predicting a rate cut in 2024.
The futures market forecasts four rate cuts in 2025.
This would see the RBA cash rate fall from an existing 12-year high of 4.35 percent to 3.35 percent for the first time since March 2023.
But it will not undo the Reserve Bank’s 13 increases in 2022 and 2023, which were the most aggressive since the late 1980s.
Core inflation in August fell to 3.4 per cent, but was still above the RBA’s 2 to 3 per cent target.