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Investing.com-- Australia’s labor market grew more than expected in October as the participation rate returned to record highs, although an increase in unemployment and a slowing pace of hours worked suggested that the labor market was still cooling.
The total number of employed people grew by 55,000 in October, according to data from the Australian Bureau of Statistics (ABS). The reading blew past expectations for a rise of 20,000 people, and accelerated sharply from the 6,700 figure in September.
The participation rate unexpectedly rose to a record high of 67% from 66.7% in the prior month.
October’s spike in employment figures comes after dismal growth over the prior two months. This saw the three-month average for jobs growth fall below levels seen in October 2022, highlighting some cooling in the labor market.
Australia’s unemployment rate rose to 3.7% from 3.6%. Annual growth in hours worked fell sharply to 1.7% from a 5% peak seen earlier this year, with the ABS noting that the trend suggested “that the labor market is starting to slow, following a particularly strong period of growth.”
Australia’s labor market was on a tear over the past year, as growing vacancies and a shortage of skilled workers saw employment conditions tighten substantially. This was a major factor in pushing up wages.
Recent data showed that Australian wages grew at a record pace in the September quarter. But analysts said that such a spike was unlikely to be repeated, and that the September quarter was a perfect confluence of several different factors.
Strength in the labor market has been a key pain point for the Reserve Bank of Australia in bringing down inflation, with higher wages keeping consumer spending largely elevated. This has factored into stickier inflation.
The RBA hiked interest rates by a cumulative 425 basis points since early-2022, although it offered some signals during its November meeting that the bank was done raising rates.
The central bank had forecast some cooling in the labor market following its rate hikes, with October’s reading likely showing as much. But the sector still remained relatively strong.
