Full-time jobs increased by 9,700 while part-time positions were up 6,200. The pace of job growth slowed compared to previous months where increases averaged 0.3 per cent/month. The figures suggest that the Reserve Bank of Australia (RBA) may have overestimated their earlier forecast of 4.3 per cent by the end of the year.
Wage growth also moderated, with wage rises for the September quarter falling back to 3.5 per cent annually from 4.1 per cent in June. Inflation for the September quarter fell back to 2.8 per cent annually, significantly down from 3.8 per cent in the previous quarter.
The latest data suggests job gains are likely to remain subdued in the near term according to Cherelle Murphy EY, Oceania’s chief economist. And with underlying inflation now stabilising, there is even a possibility the RBA could cut rates early next year if price pressures keep easing. Murphy says the stable global economic backdrop is welcome, but also notes broader international factors may impact this further.
The ABS notes that October’s job growth was the weakest since earlier in the year. ABS head of labour statistics Bjorn Jarvis added that the most recent 0.1 per cent increase in employment was below the 0.3 per cent monthly gains experienced during the prior six months. Despite this slowdown, labour markets are still strong, reinforcing the soft-landing strategy for the RBA, with stable employment a cornerstone for economic steadiness.
Some economists, such as BDO Economics’ Anders Magnusson, believe the unemployment forecast provided by RBA for the December quarter of 4.3 per cent could be on the high side. With two continuous readings at 4.1 per cent, he asserts the labour market of Australia is in a stronger position than anticipated, hence allowing RBA to only gradually adjust the cash rate.
Chief Economist for CreditorWatch, Ivan Colhoun, says the stable labour market is an indicator of positive outcomes in government goals. Financial indicators such as under-employment and youth unemployment have seen improvements rarely shared with a weak labour market. He believes these figures reflect robust job growth, even among less-experienced workers or those seeking additional hours.
While inflation is moderating, it has not yet fallen within the RBA’s desired range of between 2 and 3 per cent on a sustained basis. There is likely to be no change in the cash rate for the remainder of the year, with the RBA adopting a cautious approach to deciphering the longer-term inflation trends before rate cuts. Eventually, this cautious stance by the RBA might offer relief to Australian households in the form of lower interest rates, since inflation pressures are easing and Australia’s employment market is improving.
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