Australia’s streak of employment gains reached the longest on record in January, while unemployment fell a tick and female participation in the workforce climbed to an all-time high.
Thursday’s figures from the Australian Bureau of Statistics showed 16,000 net new jobs were added in January, in line with forecasts and a solid result given it came on top of outsized increases in both December and November.
It was the 16th straight month of increases, the longest such run since the monthly series began in 1978. Annual jobs growth of 3.3 percent was more than twice the pace of U.S. job
The unemployment rate edged down to 5.5 percent, from an upwardly revised 5.6 percent in December, and has held between 5.4 percent and 5.6 percent for nine months now.
One soft spot was a 49,800 drop in full-time jobs, though that followed an incredibly strong run over the past year.
“Overall, the job market is clearly in great shape. Jobs are being created, more people are looking for work and businesses are still keen to hire,” Craig James, Sydney-based chief
economist at CommSec, said.
“The Reserve Bank believes ‘full employment’ is near 5 percent. So there is still ample spare capacity,” he added.
The participation rate remained elevated at 65.6 percent, having climbed steadily over the past year as more women went looking for work.
With labour supply expanding to meet demand, there was less upward pressure on wages and inflation, thus no near-term trigger for a rise in interest rates by the Reserve Bank of Australia (RBA).
No hike until 2019
Just last week, the central bank’s head declared there was no strong case for a rate rise given wage growth continued to lag far behind job creation.
“We agree with the Reserve Bank that increases in the pace of wage and price growth will be gradual. Interest rate settings are solidly on hold. Today’s data cements that view,” James
That outlook was reflected in the local dollar, which dipped briefly to $0.7918 on the data. It was last up 0.1 percent at $0.7929.
Interest rate futures showed little change in the odds of a rate rise, with a move by November seen as a 50-50 shot. A hike is still not fully priced in until March 2019.
Leading indicators of labor demand remain healthy enough, with business surveys and vacancies consistent with monthly jobs growth of 15,000 to 20,000.
Yet firms remain reluctant to pay more, in part because many say they cannot raise prices in the face of intense competition, particularly from new foreign entrants.
As a result, recent wage deals across sectors, known as enterprise agreements, paid smaller increases than the ones they replaced — an unwelcome trend highlighted by RBA Assistant
Governor Luci Ellis this week.
“These agreements usually last for a couple of years, so this will weigh on overall wage outcomes for a while,” Ellis noted.
“There will probably be some lag between the reports of labour shortages and a generalised pick-up in wage growth,” he added.
Source : CNBC