Australia’s unemployment rate remained unchanged at 4.2% in August, as the economy added more jobs than anticipated, with net 47,500 positions created. This figure exceeded the 26,000 jobs predicted by economists, driven primarily by part-time work, which saw a gain of over 50,000 roles, while 3,100 full-time jobs were shed, according to the Australian Bureau of Statistics (ABS).
Signs of strength in the job market included a 0.4% rise in hours worked to 1.962 billion. Kate Lamb, ABS’s head of labour statistics, noted that while more people continued to work fewer hours due to illness, economic reasons for reduced hours remained below pre-pandemic levels. This indicates the labour market remains tight.
Treasurer Jim Chalmers welcomed the continued job creation, acknowledging that the economy remains under pressure. The Albanese government has revised its estimate of job gains since May 2022 to nearly 978,000.
The RBA, which has raised interest rates 13 times to combat inflation, is expected to hold rates steady at its upcoming board meeting. However, financial markets are predicting a potential rate cut in February 2024, pending signs of inflation easing.
KPMG’s chief economist, Brendan Rynne, expects inflation to fall further but predicts rate cuts will not begin until early next year when inflation is within the RBA's target range.
“Next week’s monthly CPI data should show inflation falling, but it is still KPMG’s expectation that the RBA won’t start to cut the cash rate until early next year, when inflation is expected to be safely within the [2%-3%] target band,” Rynne said.
The Australian dollar and the ASX200 index remained largely unchanged following the release of the jobs data.