By Stella Qiu
SYDNEY (Reuters) -Australian employment sped past forecasts in December although the jobless rate ticked higher as many more people went looking for work – the combination of trends signalling a healthy labour market that leaves alive the chance of a near-term cut in rates.
Driven by an increase in part-time roles, net employment jumped by 56,300 in December from November when it climbed by a downwardly revised 28,200, according to figures from the Australian Bureau of Statistics on Thursday.
The December jump was well above a market consensus for a rise of 15,000.
Annual jobs growth accelerated to a brisk 3.1%, more than double the historical average. The labour force also expanded at a similar rate.
The jobless rate rose to 4.0% from 3.9%, as expected, while the participation rate edged up to a record high of 67.1% from 67.0%.
“Overall it’s fairly messy, but you would characterise the labour market as remaining pretty strong… It still leaves that basic message that the labour market remains fairly tight,” said Shane Oliver, chief economist at AMP.
Slowing wage growth also suggests the labour market is not a source of inflationary pressures.
“It kind of leaves the Reserve Bank in a difficult position then… I think ultimately the the rate call for February will depend on the December quarter inflation numbers when they come out,” said Oliver.
The RBA expects underlying inflation in the fourth quarter to come in at 0.7%. Anything below that number would make it hard for the RBA not to cut rates next month, said Oliver.
The market reaction to the jobs data was muted. The Australian dollar rose 0.1% to $0.6230. Three-year bond futures trimmed earlier gains but were still up 8 ticks at 96.06 thanks to tame inflation figures from Britain and the U.S. overnight.
Swaps still imply a 68% probability that the RBA will cut rates on Feb. 18, following the quarterly inflation report and another reading on retail sales which is expected to show a pull-back in sales in December after a strong showing the prior month.
The RBA has held its policy steady for a year, judging that the current cash rate of 4.35% – up from 0.1% during the pandemic – is restrictive enough to bring inflation to its target band of 2-3% while preserving employment gains.
The central bank unexpectedly turned dovish last month as economic growth has stayed anaemic. A pick-up in consumer spending has been disappointing even with the government’s tax cuts.
Thursday’s data showed part-time jobs jumped by 80,000 in December, while hours worked rose a strong 0.5%.
