By Stella Qiu
SYDNEY (Reuters) -Australia employment far outpaced expectations for a second month in November, yet the jobless rate rose to a 1-1/2 year high as more people went looking for work, adding to signs of loosening in the labour market.
Figures from the Australian Bureau of Statistics on Thursday showed net employment jumped by 61,500 in November from October, when they rose by a revised 42,700. Market forecasts had been for an increase of around 11,000.
The jobless rate still rose to 3.9%, the highest reading since May last year, from an upwardly revised 3.8% in October. The participation rate climbed to a record high of 67.2%.
The strong employment gains pushed the local dollar higher to an almost five-month high of $0.6712, but three-year bond futures are still up 22 ticks to 96.26 thanks to easing expectations for global central banks next year.
With the Federal Reserve signalling rate cuts in the year ahead, futures are still pricing in that the Reserve Bank of Australia is now done tightening and expecting a bit more than 50 basis points of easing for 2024.
Record inflows of migrants and students have boosted the supply of labour to meet demand, so while employment was a rousing 3.2% for the year to November, the labour force grew by 3.6%, suggesting the labour market is not the main driver of inflation.
“I think from the RBA’s point of view, this is kind of where they expected it to be and I don’t think that they’ll be particularly surprised by these results,” said Cherelle Murphy, chief economist at EY Oceania.
“There is certainly enough momentum for the economy to result in employment growth, but it will slow and we will see the unemployment rate rise a little.”
The RBA last week kept interest rates unchanged at a 12-year high of 4.35% and left the door open to another move. It has jacked up interest rates by a whopping 425 basis points in the most aggressive tightening campaign in the bank’s history to tame inflation.
The breakdown showed full-time employment rose by 57,000 in November.
Treasurer Jim Chalmers on Thursday welcomed the resilience in the labour market.
“It is softening in expected ways… but it is really remarkable that we finish or we got to the end of November with an unemployment rate with a three in front of it,” Chalmers told a press conference.
Indeed, the data added to signs of loosening in the drum-tight market, with the ABS noting a slowdown in hours worked, which resulted in a narrowing gap with the overall growth rates in employment.
Vacancies have also been ticking lower as positions get filled. Job ads on Australia’s largest employment site SEEK, fell 4.3% in November, although they’re still over 13% higher than a year ago.
“We expect it to be harder to hold down the unemployment rate from here given the above dynamic in a slowing economy and when indicators of the labour market are loosening,” said Belinda Allen, an economist at Commonwealth Bank of Australia.
(Reporting by Stella Qiu; Editing by Sam Holmes and Christian Schmollinger)
