By James Glynn
SYDNEY–Australia’s labor market surged back to life in August with an additional 64,900 jobs added to the economy, beating expectations and tempering views that the Reserve Bank of Australia will refrain from raising interest rates further.
With participation in the job market also rising over the month, the unemployment rate remained steady at 3.7% in August, the Australian Bureau of Statistics said Thursday.
The recovery in employment growth, which included 62,100 part-time jobs, snaps a recent soft patch for the job market that saw the unemployment rate rise from around 3.5% earlier in the year.
With the RBA saying recently that it will assess inflation and jobs data closely when determining the course of interest rates, Thursday’s numbers are likely to stoke the case for at least one more rate hike before the end of the year.
“It’s clear the labor market remains extremely tight despite the 400 basis points of rate hikes the RBA has delivered, and today’s set of numbers won’t give the RBA the breathing room it might have been hoping for to end its rate hiking cycle,” said Tony Sycamore, an analyst at IG Markets.
The large jump in employment in August came after a small drop in July, which occurred around the school-holiday period, the ABS said.
Looking at the past two months, average employment growth was around 32,000 people a month, similar to the average growth recorded over the past year, the ABS added.
The participation rate also increased to a record high of 67.0% in August, while monthly hours worked fell 0.5% over the month.
The underemployment rate rose 0.2 percentage points to 6.6% in August, 0.6 percentage points higher than in the same month of 2022, but was still around 2.2 percentage points lower than before the pandemic, the ABS added.
Kieran Davies, chief markets economist at Coolabah Capital, said the job market remains tight and the unemployment rate is still well below levels the RBA would prefer it to be at in order to remove upward pressure on consumer prices.
“The labor market still remains very tight and the RBA will likely still be looking for the unemployment rate to rise to around the mid-4s,” Davies said.
Write to James Glynn at email@example.com; @JamesGlynnWSJ
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