Oceania

Australia’s Falling Jobless Numbers Fuel Talk of Rates Rise

 

Australia’s jobless rate stands at its lowest in almost 50 years, but the slowdown in employment growth will probably temper any central bank interest rate rises.

Data issued by the Australian Bureau of Statistics on Thursday showed the jobless rate held at 3.9% in April, from a downwardly revised 3.9% in March, matching market forecasts.

The 4,000 rise in employment was the weakest increase since lockdowns ended in October and was well below the analyst consensus of a 30,000 rise.

But the fall in unemployment will be welcomed by Prime Minister Scott Morrison, who has made jobs the clarion cry of his election campaign ahead of what is expected to be a close vote on Saturday.

It also strongly suggests the Reserve Bank of Australia (RBA) will lift interest rates again in June as it scrambles to contain a flare up of inflation to two-decade highs.

 

Strong Inflation Tide

“But the slowdown in employment growth and the sluggishness of wage growth will probably convince the RBA to hike rates by 25 basis points (bp) next month rather than the 40bp some had been anticipating,” Marcel Thieliant, Australia and New Zealand economist at Capital Economics, said.

The central bank’s increase to 0.35% this month was the first since 2011 and markets are odds on it will move to 0.60% at its June 7 policy meeting.

So strong is the inflation tide globally that investors are wagering rates will rise to at least 2.5% by the end of the year, even if that threatens to cripple the economy.

So far, the labour market has withstood the pressure with employment rising by 381,500 in the past 12 months. Under-employment also fell to its lowest since 2008 and this rate has a close correlation to wages over time.

Wages, though, are still lagging, at least by the official measure which showed annual growth ticked up only slightly in the first quarter to 2.4%, half the pace of inflation.

“With job vacancies at record highs relative to the labour force, the unemployment rate will continue to decline, perhaps to around 3.5% by next year,” Thieliant added.

 

  • Reuters, with additional editing by George Russell

 

 

READ MORE:

Japan’s Mitsui Buys Stake in Australian Carbon Farming Firm

Pentagon Backs US Funding For Strategic Mining in Australia, UK

US Senate Confirms Caroline Kennedy as New Australia Envoy

 

 

George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

Recent Posts

HSBC Accused of Overstating Risks of Asia Unit Break-Off

A source close to the Chinese insurer, which pushed for the Asia business spin-off, say…

19 mins ago

US Reassessing China Tariffs After Harsh Taiwan Response

Biden's team is divided on whether to drop or expand tariffs imposed by Trump on…

4 hours ago

Asia Stocks Rally as US Inflation Eases Rate Hikes Fears

Asian shares pushed higher on Thursday as investors bet on the pace of interest rate…

5 hours ago

China Leads the US on Scientific Research Papers – Guardian

Chinese scientific research accounts for almost a quarter of the world's output, the report said,…

5 hours ago

Bangladesh Minister Warns on China’s Belt and Road Loans – FT

Developing countries should think twice before taking loans via China's Belt and Road scheme given…

5 hours ago

India Shares Hit Four-Month High, Banks and Tech Lead

"The optimism came on the back of a US consumer inflation rate that eased in…

6 hours ago