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(Australian Associated Press)
A surge in part-time work has helped the unemployment rate tick down to a seasonally adjusted 5.2 per cent, but economists say another interest rate cut is likely despite the better-than-expected figures.
Thursday’s data from the Australian Bureau of Statistics featured a 4,200 increase in people with full-time work and 35,700 extra people in part-time during November as the workforce bounced back from a disappointing October, where 19,000 jobs were shed and unemployment rose to 5.3 per cent.
Underemployment also ticked lower last month – falling from 8.5 per cent to 8.3 per cent – while the number of unemployed persons fell 3.3 per cent, from 724,900 to 708,100.
Most economists had expected 15,000 jobs to be added in November and for the unemployment rate to remain unchanged.
However, BIS Oxford senior economist Dr Sarah Hunter said the improved figures failed to hide the fact that progress towards reaching full employment had stalled over the last six months.
This means more bad news for wages growth, she said.
“With the labour market not materially tightening and the leading indicators continuing to suggest a softer pace of growth in employment in the near term, wages growth is unlikely to reach 3.0 per cent in the next 12 to 18 months which will limit any upward pressure on price inflation,” Dr Hunter said.
Dr Hunter said, as a result, the RBA was still likely to cut the cash rate again early in 2020 – even as markets pared the chances of a new record low.
The Reserve Bank left rates on hold at 0.75 per cent this month to allow Christmas and New Year spending to filter through before it considers the possibility of a cut to 0.5 per cent at its next meeting in February.
The central bank seemingly laid the groundwork for a February cut at its December board meeting when members said it would be “important to reassess the economic outlook” when it next meets.
Markets reacted to Thursday’s jobs data by lengthening the odds on another cut.
Nonetheless, Indeed’s APAC economist Callam Pickering said concerns remained over the labour market outlook as other economic indicators continued to soften.
“Measures of job vacancies and job advertisements have declined, and the broader economy remains weak outside of exports,” Mr Pickering said.
“Policy-makers are unlikely to overreact to a single month of positive data.”
EY’s chief economist Jo Masters agreed that the data suggested job creation was not driving unemployment down as hoped.
“Indeed, the unemployment rate has been hovering around 5.25 per cent for eight months now,” Ms Masters said.
This is well above the RBA’s target of 4.5 per cent required to put pressure on wages growth and lift inflation.
The Australian dollar jumped from 68.60 US cents to 68.75 within five minutes of the data being released, and was worth 68.72 by 1220 AEDT.