SKIP TO MAIN CONTENT

Jobless fall could tip the balance on rates

A growth in new Jobs in December could cut the unemploymentrate to an eight-month low and further increase the chances of an interest rate hike in February.

jobs_businessmen_0808_b_aap_53154317

3 min read

Published

Updated

Source: AAP


Skip to article content

It was mostly in the part-time category, but employment growth in December was strong enough to cut the unemployment rate to an eight-month low and keep a February interest rate hike on the agenda.

The figures, reported by the Australian Bureau of Statistics (ABS) on Thursday, showed the seasonally adjusted number of people with jobs in December was 35,200, or 0.3 per cent, higher than in November.

If was the fourth increase of about that size in a row.

News that makes sense

Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.

By subscribing, you agree to SBS’s terms of service and privacy policy including receiving email updates from SBS.

With the proportion of the working-age population active in the labour market staying steady at 65.2 per cent, the unemployment rate fell to 5.5 per cent in December from 5.6 per cent in November.

November's figure was revised down from 5.7 per cent.

The jobless rate peaked at 5.8 per cent in June and was still there in October.

This represents a sharp divergence from widely-held expectations expressed at times last year, typified by the government's budget forecast that a peak of 8.5 per cent would be reached late this year.

The ABS's estimate of aggregate hours worked is fairly choppy from month to month in seasonally adjusted terms - rising by 0.9 per cent in September, falling by 0.1 per cent in October, rising 0.9 per cent in November then falling by 0.1 per cent again in December.

The trend is upward, however - the ABS estimates the trend in hours worked has risen every month from July, following 12 months of declines.

The board of the Reserve Bank of Australia (RBA) meets on February 2.

It will decide whether or not to raise interest rates after three moves of a quarter of a percentage point in October, November and December lifted the cash rate to 3.75 per cent.

Economic growth, as shown by the latest annual gross domestic product (GDP) rise of just 0.5 per cent over the year to September, remains sluggish.

But it seems clear that demand for labour in key areas boosted by the ongoing resources boom and fiscal stimulus measures has been enough to keep labour demand bubbling.

The central bank's decision on rates is likely to be "finely balanced", as the RBA described the choice it made in December.

But the labour force figures could tip the balance, by giving the board confidence that another increase would be unlikely to derail the recovery, especially as a move to four per cent would still leave policy on the stimulatory side of neutral.


Get SBS News straight to your inbox

Sign up now for daily news from Australia and around the world. You can also subscribe to Insight's weekly newsletter for in-depth features and first-person stories.

By subscribing, you agree to SBS’s terms of service and privacy policy including receiving email updates from SBS.

Follow SBS News

Download our apps

Listen to our podcasts

Get the latest with our News podcasts on your favourite podcast apps.

Watch on SBS

SBS World News

Take a global view with Australia's most comprehensive world news service

Stream now

Watch the latest news videos from Australia and across the world