By Stella Qiu
SYDNEY (Reuters) -Australian employment sped past forecasts in December although the jobless rate ticked higher as many more people went searching for work – the mixture of trends signalling a healthy labour market that leaves alive the possibility of a near-term cut in rates.
Driven by a rise in part-time roles, net employment jumped by 56,300 in December from November when it climbed by a downwardly revised 28,200, in keeping with figures from the Australian Bureau of Statistics on Thursday.
The December jump was well above a market consensus for an increase of 15,000.
Annual jobs growth accelerated to a brisk 3.1%, greater than double the historical average. The labour force also expanded at an analogous rate.
The jobless rate rose to 4.0% from 3.9%, as expected, while the participation rate edged as much as a record high of 67.1% from 67.0%.
“Overall it’s fairly messy, but you’ll characterise the labour market as remaining pretty strong… It still leaves that basic message that the labour market stays fairly tight,” said Shane Oliver, chief economist at AMP.
Slowing wage growth also suggests the labour market will not be a source of inflationary pressures.
“It type of leaves the Reserve Bank in a difficult position then… I feel ultimately the the speed call for February will rely on the December quarter inflation numbers after they come out,” said Oliver.
The RBA expects underlying inflation within the fourth quarter to are available in at 0.7%. Anything below that number would make it hard for the RBA not to chop rates next month, said Oliver.
The market response to the roles data was muted. The Australian dollar rose 0.1% to $0.6230. Three-year bond futures trimmed earlier gains but were still up 8 ticks at 96.06 due to tame inflation figures from Britain and the U.S. overnight.
Swaps still imply a 68% probability that the RBA will cut rates on Feb. 18, following the quarterly inflation report and one other reading on retail sales which is anticipated to indicate a pull-back in sales in December after a powerful showing the prior month.
The RBA has held its policy regular for a yr, judging that the present money rate of 4.35% – up from 0.1% through the pandemic – is restrictive enough to bring inflation to its goal band of 2-3% while preserving employment gains.
The central bank unexpectedly turned dovish last month as economic growth has stayed anaemic. A pick-up in consumer spending has been disappointing even with the federal government’s tax cuts.
Thursday’s data showed part-time jobs jumped by 80,000 in December, while hours worked rose a powerful 0.5%.