RBA Has Room to Tighten Despite Cooling Labor Market
Australia's labor market is slowing down, but not fast enough to change the Reserve Bank of Australia's hawkish stance on interest rates. The latest jobs report shows a fall in employment by 15,600 in one month, with part-time jobs dropping by 32,200.
However, full-time employment edged higher over the same period, and unemployment remains at 4.5%, which is still below its long-term average. According to Matt Simpson, StoneX Media Market Analyst, the labor market data does not provide a strong enough signal for the Reserve Bank of Australia to change course.
The Australian participation and employment-to-population ratios are also drifting lower but remain high by historical standards. With markets and banks already expecting a rate hike, the labor data now matters most for how far the Reserve Bank of Australia goes after that.