Australia's Strong Job Market "A Variable for Interest Rate Cuts"

New employment in Australia exceeded 56,000 in December last year, surpassing market expectations, and is expected to play a significant role in the Reserve Bank of Australia (RBA)'s discussion on interest rate cuts in February this year.

Workers at a construction site in downtown Sydney, Australia (Photo by Jeong Dong-cheol)

On the 16th (local time), The Australian daily cited data from the Australian Bureau of Statistics (ABS), reporting that although the unemployment rate slightly increased from 3.9% to 4% in December last year, the employment-to-population ratio (the proportion of employed or job-seeking individuals) remained at a record high of 67.1%.

This indicates that the Australian labor market remains resilient despite high interest rates and slowing economic growth.

Active hiring increases in government-related sectors such as health, education, and public services led the strength in the labor market. The underemployment rate, which represents employed persons wanting additional work, also decreased from 6.1% in November last year to 6% in December.

The increase in new employment was entirely due to a rise of 80,000 part-time workers. Conversely, full-time employment decreased by 23,700.

The RBA plans to use this employment data as an important reference at its monetary policy meeting scheduled for February 17?18. If the labor market remains excessively strong, it could add further inflationary pressure, becoming a variable in interest rate policy.

Meanwhile, considering that retail sales and inflation indicators in December last year were weaker than expected, the Australian financial market sees a 75% chance that the benchmark interest rate will be cut by 0.25 percentage points from the current 4.35% in February.

If an interest rate cut is indeed implemented, it is expected to reduce the burden of mortgage loans on households, which could help boost the approval ratings of the Anthony Albanese Labor government ahead of the federal election scheduled for May this year.

Jung Dong-chul, Hanho Times Reporter

※This article was created using content provided by Hanho Times (www.hanhotimes.com).