Australian employment surged past expectations for the third consecutive month in August, with 47,500 jobs added, far exceeding the forecasted 25,000. However, the jobless rate remained steady at 4.2%, as the workforce expanded rapidly, keeping the labor market tight. This supports the Reserve Bank of Australia’s (RBA) stance that interest rate cuts are unlikely in the near future.
All employment gains were in part-time jobs, and hours worked rose by a solid 0.4%, reflecting a robust labor market. The participation rate held steady at a record 67.1%, further underscoring the labor force's strength.
The RBA has maintained its cash rate at 4.35% since November, up from 0.1% during the pandemic, viewing it as sufficiently restrictive to manage inflation, which stood at 3.9% last quarter. The central bank expects inflation to return to its target range of 2%-3% by late 2025. Despite the strong data, markets still anticipate a 75% chance of a rate cut by year’s end.
The Australian dollar also reacted to the news, rising 0.1% to US$0.6771.
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