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Australia’s unemployment rate held steady at 4.2% in August, reflecting a strong job market despite ongoing economic pressures. The economy added a net 47,500 jobs during the month, surpassing economists' forecasts of 26,000 new positions. The increase was largely driven by a rise in part-time employment, which saw an addition of over 50,000 roles. However, there was a reduction of approximately 3,100 full-time positions. The Australian Bureau of Statistics (ABS) reported these figures, highlighting a mixed but generally positive employment landscape.
Hours worked also showed a positive trend, with a 0.4% increase bringing the total to 1.962 billion hours. This growth suggests a resilient labor market, although a rise in the number of individuals working reduced hours due to illness was noted. Nevertheless, the reasons for reduced working hours related to economic constraints are still below pre-pandemic levels, underscoring the robustness of the current job market.
Treasurer Jim Chalmers expressed appreciation for the job creation figures, recognizing the ongoing economic challenges. The Albanese government has updated its estimate of job gains since May 2022 to nearly 978,000, reflecting the continued strength of the labor sector.
The Reserve Bank of Australia (RBA), which has raised interest rates 13 times to address inflationary pressures, is anticipated to maintain the current rates in its upcoming board meeting. Despite this, financial markets are speculating that a rate cut could be on the horizon in February 2024, contingent on a noticeable easing of inflation.
Brendan Rynne, Chief Economist at KPMG, forecasts a further decline in inflation but anticipates that rate reductions will not commence until early next year, once inflation aligns more closely with the RBA's target range of 2% to 3%. Rynne noted that the forthcoming monthly Consumer Price Index (CPI) data is likely to indicate a drop in inflation, yet he believes the RBA will hold off on cutting the cash rate until inflation is firmly within the target band.
Following the release of the employment data, both the Australian dollar and the ASX200 index showed minimal movement, indicating a balanced market reaction to the job figures.
