The jobless rate advanced to 5.2% from 4.6% in September and above economists’ forecast of 4.8%, Australian Bureau of Statistics data showed Thursday. Employment fell by 46,300 roles, its third monthly decline, compared with economists’ estimate for a 50,000 increase. The participation rate edged up to 64.7% in October from 64.5%.
Australia’s benchmark three-year bond yield trimmed an earlier gain to be up 13 basis points at 1.02% while the 10-year yield was up 8 basis points at 1.81%. The Australia dollar erased its advance and dropped 0.1% to 73.20 U.S. cents.
The weaker jobs result is something of a reprieve for the Reserve Bank of Australia, under pressure from the bond market over faster consumer-price growth against a backdrop of rising global inflation concerns. That narrative was only reinforced when U.S. consumer prices rose last month at the fastest annual pace since 1990.
“It may seem counterintuitive for unemployment to rise as conditions are about to improve,” said Bjorn Jarvis, head of labor statistics at the ABS. “However, this shows how unusual lockdowns are, compared with other economic shocks, in how they limit being able to work and look for work.”
The result suggests a hiring hangover from months-long lockdowns in Sydney and Melbourne, with restrictions only lifting in recent weeks. The RBA is running ultra low interest rates to support the economy and ultimately aiming to push down unemployment in order to spark faster wages growth.
The RBA sees this as its best means to return inflation sustainably to the midpoint of its 2-3% target, which policy makers expect will take about two years. Markets are more optimistic on the recovery and are challenging that view by pricing in a tightening cycle beginning next year.
Today’s jobs report, while only one month, is likely to add ballast to Governor Philip Lowe’s (NYSE:) view that rates are only likely to rise from the current 0.1% in 2024.
Among other details in today’s report:
- Part-time roles fell by 5,900 while full-time positions dropped by 40,400
- Hours worked declined by 0.1%
- Under-employment increased 0.3 percentage point to 9.5%
- Under-utilization climbed by 0.9 percentage point to 14.7%
- The employment to population ratio fell to 61.3%
(Updates with further details from report.)
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