Australian employment rises, supporting further rate hikes

(Bloomberg) — Australian employment rose more than three times economists’ estimates and unemployment remained at a 48-year low, bolstering expectations that the Reserve Bank will raise interest rates further in 2023.

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The economy added 64,000 roles in November from a month earlier, well ahead of a projected increase of 19,000, according to data from the Australian Bureau of Statistics on Thursday. The participation rate rose to 66.8%, equaling a record set earlier in the year, while unemployment remained at 3.4%.

Australian government bond yields and the currency rose after the release, which suggested the economy is so far weathering the sharpest monetary tightening in 33 years. The result is also a positive sign for wage growth which finally surpassed 3% in the recent quarter, the strongest result since early 2013.

The jump in hiring “is consistent with other labor market indicators showing continued growth through 2022,” Bjorn Jarvis, head of labor statistics at ABS, said in a statement. “Hours worked are also well above pre-pandemic levels.”

Labor market strength is a key reason the central bank thinks it can engineer a soft landing in the A$2.2 trillion ($1.5 trillion) economy as it shrinks to curb inflation . The RBA expects unemployment to remain around 3.4%-3.5% until mid-2023.

Key to this outlook is high labor supply across the economy, although there are also signs that hiring activity is starting to cool. Separate data from careers website Seek showed advertisements were down 4.9% in November compared to the previous month, driven by hospitality and tourism, IT support and office.

SEEK’s ANZ chief executive, Kendra Banks, expects “job supply and demand to remain quiet in December and January as businesses and applicants regroup ahead of the new business year.”

The RBA has raised rates by 3 percentage points since May to curb rapid inflation and most economists expect it to hike another time or two to a terminal rate of 3.6%, from the current 3.1%.

Today’s report also showed:

  • Underemployment fell 0.2 percentage points to 5.8% and underutilization decreased 0.1 percentage points to 9.3%

  • Full-time jobs increased by 34,200, while part-time jobs increased by 29,800

  • Monthly hours worked decreased, while the employment/population ratio rose to 64.5%

–With assistance from Tomoko Sato.

(Updates with graph, more details.)

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