Australia’s jobless rate has dipped to the lowest level in six years in July and full-time jobs jumped, supporting hopes for an eventual revival in long-lagging wages growth.
The seasonally adjusted unemployment rate fell to 5.3 per cent, while employment fell by 3,900 jobs to 12.575 million and the participation rate fell by 0.1 point to 65.5 per cent, figures from the Australian Bureau of Statistics show.
Economists were expecting an increase of 15,000 jobs and the unemployment rate to remain at 5.4 per cent.
“While a moderation from the impressive growth in June was inevitable, the very subdued July figure confirms our view that jobs growth ran well ahead of output in 2017,” BIS Oxford Economics’ Sarah Hunter said.
We expect growth in employment to remain modest for the rest of this year.”
The unemployment rate has stayed in a 5.4 to 5.6 per cent band since mid-2017.
July’s drop was entirely led by part-time jobs which slipped by 23,200 to 3.988 million while full-time jobs increased by 19,300 to 8.587 million.
Annual jobs growth of 2.4 per cent was still well ahead of the US pace of job creation of 1.6 per cent.
“The fall in employment is not worth losing sleep over,” said Paul Dales, chief economist at Capital Economics.
“Jobs growth remains healthy enough and the unemployment rate has continued to edge lower.”
“The bigger issue is that structural changes in the economy mean that even a much lower unemployment rate probably won’t generate the rise in wage growth that the RBA is banking on to boost underlying price inflation,” Dales added.
The Reserve Bank of Australia (RBA) has held rates at a record low of 1.5 per cent for almost two years awaiting a revival in consumer prices and further falls in unemployment.
Markets imply little chance of a move until 2020, with inter-bank futures only showing a 50-50 probability of a hike by Christmas next year.
Data out on Wednesday showed wage growth crawled near record lows last quarter despite a surge in jobs since early last year, an outcome that risks restraining consumer spending and inflation.
The trend of more part-time and casual jobs in the economy is one reason for slow wage growth, analysts say.
The Australian dollar rebounded on the news, rising as high as 72.7 US cents, from 72.35 US cents immediately before the 1130 AEST data release.