Due to the resilient Australian economy and a tight labor market, employers added more jobs last month than anticipated, raising the prospect of another rate hike by the Reserve Bank.
October’s unemployment rate increased to 3.7%, according to a report released on Thursday by the Australian Bureau of Statistics. The month saw a net addition of 54,900 jobs. 17,000 of those were full-time jobs.
Market analysts had projected that, despite only 24,000 new jobs being created, the unemployment rate would increase to 3.7% from the 3.6% recorded in September.
The percentage of the population in work or seeking work, measured by the participation rate, returned to its record level of 67%, up 0.2 percentage points.
The head of labor statistics at the ABS, Bjorn Jarvis, noted that other metrics, like hours worked, indicated some improvement. October’s job increase came after September’s 8,000 gain.
“These increases over the last two months translate into an average monthly growth in employment of about 31,000 people, which is marginally less than the average monthly growth of 35,000 people since October 2022,” Jarvis stated.
According to him, the yearly growth in hours decreased to 1.7% from roughly 5% in the middle of the year, and this was less than the 3% annual growth in employment.
The jobs data come after the ABS released on Wednesday, which indicated that the September quarter saw the highest quarterly increase in the survey’s 26-year history—a 1.3% increase in the wage price index. Additionally, the 4% annual pace was the highest in over 14 years.
The Reserve Bank of Australia raised its growth prediction for the gross domestic product last week due to the robustness of the underlying economy. It also forecasted that by June of next year, the unemployment rate would have increased to roughly 4.3%, down from a peak of roughly 4.5% earlier.
Investors had estimated that there was less than 10% chance the RBA would follow this month’s interest rate rise with another in December before Thursday’s labor market data.
According to the ASX, they were also wagering on the likelihood of an interest rate rise the following year, which was less than a 50/50 shot.
Following Thursday’s data, the dollar saw a slight decline, closing at just over 65 US cents. The stocks continued to hold losses of roughly 0.25% for the day.
Senior CBA economist Stephen Wu pointed out that the October employment numbers were enhanced by a “temporary effect on employment, hours, and participation” resulting from the November 14 Aboriginal and Torres Strait Islander Voice referendum.
