Australia adds 65,000 jobs as unemployment rate drops
Economists warn that new unemployment numbers increase the likelihood of a rate hike sooner rather than later.
Young Australians have driven a staggering employment boom that has pushed the unemployment rate well below forecast predictions.
Australia’s unemployment rate fell to 4.1 percent in December from 4.3 percent in the previous month as 65,000 new workers found work in the final month of last year.
Harry Murphy Cruise, head of economic research and global trade at Oxford Economics Australia, said the possibility of a rate hike is increasing.
“The resilience of the labor market has been a defining feature of the economy for the better part of four years,” he said.
“Despite periods when inflation and interest rates rose in parallel, unemployment consistently performed above expectations.”
Mr Murphy Cruise said markets had forecast unemployment to rise to 4.6 per cent by mid-year, but the job market was increasingly “digging in its heels”.
BDO chief economist Anders Magnusson agreed with this view and said that the surprising strength in the market paved the way for an interest rate increase in February.
“This result suggests that the labor market remains tight enough that full employment will not be jeopardized if the RBA raises rates if inflation data warrants it,” Mr Magnusson said.
“That said, I expect the RBA to keep the cash rate steady and continue monitoring for another month rather than moving into a tightening cycle in February.”
ABS head of employment statistics Sean Crick pointed to the fall in youth unemployment as the main driver behind Thursday’s shock figure.
Unemployment Figures
“Fewer young people were underemployed in December, with the underemployment rate for 15-19 year olds falling by 2.1 percentage points to 17.4 per cent,” Mr Crick said.
Overall, the growth in employment was driven by male employment, which increased by 49,000, while female employment recorded a smaller increase of 17,000.
Working hours also increased, exceeding 2 billion for the first time.
The unemployment rate was 4.3 percent in November.
Before the Australian Bureau of Statistics’ announcement on Thursday morning, the market had expected employment to rise by 35,000 workers and the unemployment rate to remain steady at 4.3 per cent.
More to come
