RBA Still Tipped to Raise Rates Despite Mixed Labour Market Signals

Australia's latest labour force figures have left the Reserve Bank of Australia likely to raise interest rates next week, despite some mixed signals about the strength of the labour market.

The employment data showed a rise of 39,500 in August, well above forecasts for a gain of 20,000. However, part-time jobs increased by 46,000 while full-time employment fell by 6,000. The unemployment rate rose to 4.6% from 4.5% in July.

CreditorWatch Chief Economist Ivan Colhoun noted that the combination of stronger employment growth and higher unemployment pointed to a rise in labour force participation. However, he questioned how much confidence should be placed in the monthly figures due to changes in the Australian Bureau of Statistics survey process and unusual movements between people being outside the labour force and then counted as unemployed.

Colhoun argued that despite some uncertainty about the data, the broader trend suggested some easing in labour market conditions. This could lead to wage pressures moderating over time.