The unemployment rate increased in December, while job creation also rose, in a sign of a resilient labour market that creates uncertainty over an expected interest rate cut next month.
Australia’s jobless rate lifted to 4% in December, the Australian Bureau of Statistics data revealed on Thursday. At the same time, there were 56,300 additional people employed.
The employment data is one of the Reserve Bank of Australia’s favoured metrics that informs interest rate settings, given a weakening jobs market could help make the case that the economy should be stimulated via a lower cash rate.
Ahead of the data, investors were pricing in a 73% chance of a quarter percentage point rate cut to 4.1% when the RBA board next meets in February.
A cut to the official rate would flow through to most mortgage holders, and provide a boost to the government ahead of an election fought over cost-of-living policies.
Australia’s jobless rate, seasonally-adjusted, had recorded a surprise drop in November to 3.9%, representing an eight-month low and surprising forecasters with the strength of the labour market. There was also solid employment growth.
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Core inflation has been drifting towards the Reserve Bank’s 2-3% inflation target.
A strong labour market has enabled many households to weather a prolonged period of high inflation that has triggered steep rises in living costs.
But the signs of community stress are clear, with food charities facing unprecedented demand.
Bank data released this week shows that there was a sharp 8.3% fall in spending on household goods in December, according to the Commonwealth Bank. Facing a severe housing shortage, renters represented one of the main cohorts to make spending cuts.
The Australian dollar, which has been under pressure this year, lifted modestly in response to the labour force figures.