According to a report, the unemployment rate increased to 3.7% in October, despite the fact that a total of 54,900 jobs were added to the economy during the month. 17,000 of the roles were for full-time employment.
Employers in Australia added more positions than projected last month as a result of the resilient economy’s contribution to a tight labor market. This development keeps the potential of another interest rate increase from the Reserve Bank of Australia open.
The unemployment rate was estimated to be 3.6% in September, but market economists expected that it would rise to 3.7% in October, despite the fact that only 24,000 jobs would be added.
The participation rate, which measures proportion of population that is employed or actively seeking employment, increased by 0.2 percentage points to reach a new all-time high of 67%.
However, the head of labor statistics at the ABS, Bjorn Jarvis, stated that other metrics, such as hours worked, showed some ease. The increase in employment in October came on the heels of a gain of 8,000 jobs in September.
According to Jarvis, “looking back over the past two months, these increases equate to average employment growth of around 31,000 people a month.” This is a modest decrease from the average rise of 35,000 people a month that has occurred every month since October 2022.
According to him, the annual rise in hours worked fell to 1.7%, which is less than the annual growth in employment, which is 3%. This is down from approximately 5% in the middle of the year.
Following the announcement of the jobs numbers on Wednesday, the ABS reported that the wage price index had increased by 1.3% in the September quarter, making it the highest quarterly increase in the survey’s entire 26-year history. Additionally, the yearly rate of 4% was the highest it has been in over 14 years.
The Reserve Bank of Australia also upgraded its projection for maturing of gross domestic product (GDP) last week due to the robustness of the economy as a whole. In addition, it forecasted that the unemployment rate would climb to approximately 4.3% by next June, which was lower than the prior peak projection of approximately 4.5%.
Before the release of Thursday’s numbers on the labor market, investors had a less than 10% likelihood that RBA will raise interest rates again in December after raising them this month. According to the ASX, they were also wagering that there was less than a fifty-fifty likelihood of there being an increase in interest rates the next year.
Following the release of the statistics on Thursday, the value of the dollar took a momentary dip, falling to just above the 65-cent threshold in trading. The market was still hovering at a loss of approximately 0.25% for the day.
Stephen Wu, a senior economist at the CBA, pointed out that the “temporary effect on employment, hours, and participation” that the Aboriginal and Torres Strait Islander Voice vote that took place on November 14 had contributed to the increase in employment data for October.
“Given that, we could expect some payback next month, perhaps more so in employment, given that was stronger than expected,” Wu said. He added that the October consumer price index readings for October “will be the one to watch” in terms of data releases before the RBA board meeting on December 5th. The RBA board meeting will take place on December 5th.
The employment data, according to Warren Hogan, chief economic advisor at Judo Bank, are “amazing” and evidence of an economy “operating beyond its capacity.”
He stated that researchers will be examining “an economic experiment for years to come” as Australia continued to absorb a jump in the number of people looking for work due to the country’s growing population.
Hogan stated that there is still a chance that the RBA would raise interest rates for the 14th time on December 5; however, the board of directors of the bank won’t get together again until February; after that, they will meet every six weeks.
He stated that there is still an extremely high need for labor. “What we’re seeing here is not a typical cycle.”
The unemployment rate for people aged 16 to 24 increased to 8.7% last month, while the overall number of people without jobs increased by 27,900. This is a reflection of the greater participation rate.
The seasonally adjusted unemployment rate in New South Wales was 3.4%, making it the state with the lowest rate among the states. This rate is an increase from September’s 3.3% figure. The unemployment rate in Victoria climbed from 3.5% to 3.8%, the unemployment rate in Queensland rose from 3.9% to 4.3%, and the unemployment rate in Western Australia increased from 3.3% to 3.8%. The numbers for the other states were either unchanged or somewhat lower.