Australia job numbers: Reasons for optimism?

Australia added 53,000 new jobs last month, and the seasonally adjusted unemployment rate remained stable at 3.5%, according to data from the Australian Bureau of Statistics. These figures demonstrate sustained growth, which market observers interpret as a sign of the Australian economy's resilience and support the case for the Reserve Bank to raise interest rates again.

The data also provide reasons for optimism. Alongside the increase in employment rates, the employment-to-population ratio rose by 0.1 percentage points to 64.4%, and the participation rate remained at 66.7%. These indicators are close to their all-time highs in November 2022, with the unemployment rate remaining near its lowest level since the mid-1970s.

Furthermore, female employment has shown consecutive months of strong growth. Over the past two years, 81,000 women have joined the labor force, resulting in a record high female participation rate of 62.5% and an employment-to-population ratio of 60.4%.

According to authorities, these indicators are in line with the trend of a "relatively strong" labor market, which has seen the Reserve Bank implement a record 10 consecutive interest rate hikes.

Quoted in The Guardian Australia, Stephen Wu, an economist at Commonwealth Bank Australia, stated that the Australian economy has been able to generate employment at a pace that keeps up with the rapidly expanding population, after facing disruptions during the Covid pandemic which closed the borders.

"The working-age population has grown by 2.3% over the past 12 months, its fastest pace since 2008," said Wu. "This strength reflects the rapid pickup in net overseas migration driven largely by international students."

According to the economist, the population is now only 0.5% below pre-pandemic trends, closing a gap that had widened to 1.5% by the end of 2021.

EY chief economist Cherelle Murphy, also quoted in Australian media, noted that there has not yet been a tipping point in demand for workers, with approximately one job vacancy for every unemployed person. Murphy referred to the latest National Australia Bank survey, which found that business conditions remain well above their long-term average.

"The Reserve Bank would welcome continued progress in the labor market, but is concerned that this poses an upside risk to inflation for the remainder of the year, given the upside risks to wages," said Murphy. "If this were to occur, and if inflation remains stubbornly high, a further rate hike would be warranted."