Economy adds 56k jobs, blowing past expectations
The latest ABS labour market report suggests a rate cut might not be needed in the near term, economists have said.
Employment blew past expectations last month with 56,000 jobs added to the economy and the participation rate rising to a record high, latest data from the Australian Bureau of Statistics has shown, denting the prospect of a February rate cut.
The data, released on Thursday, showed the number of employed people grew by 0.4 per cent and the participation rate increased 0.2 per cent to reach a high of 67.1 per cent.
Head of labour statistics Bjorn Jarvis said the increase in the participation rate meant unemployment also rose by 0.1 per cent to 4.0 per cent.
“The rise in both the number of people employed and unemployed also saw a further rise in the participation rate, that is the percentage of the population who are employed or unemployed,” Jarvis said.
“The participation rate rose 0.2 percentage points to a record high of 67.1 per cent in December.”
“This was 0.5 percentage points higher than a year ago, and 1.6 percentage points higher than March 2020.”
AMP deputy chief economist Diana Mousina said the strength in the labour market over 2024 was “surprising” and largely driven by a growth in public sector jobs and high migration inflows.
“Public sector jobs growth was stronger than expected and helped to keep employment growth solid,” she said.
“The pace of jobs growth was expected to ease and the unemployment rate was forecast to be around 4.5 per cent in 2024.”
The market also expected a much smaller 15,000 rise in employment in December.
According to the ABS, full-time employment fell by 23,7000 and part-time employment rose by 80,000 over the month.
Seasonally adjusted monthly hours worked rose by 0.5 per cent and were 3.2 per cent higher over the year.
Mousina said AMP predicted the RBA’s first cut would be in May.
The employment data proved “solid across the board” and was a sign that a rate cut might not be needed to support the economy, she said.
“It is still unclear if a rate cut will occur in February ... the December quarter inflation figures will be the final piece in the interest rate debate puzzle.”
BDO economics partner Anders Magnusson agreed the labour market was “tight”, with unemployment “stubbornly” below the RBA’s forecast of 4.3 per cent.
He said a cash rate cut in February was unlikely. “Today’s jobs release doesn’t change the inflation story,” he said.
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