The Reserve Bank of Australia will scrutinize upcoming unemployment data to assess the impact of its recent interest rate hikes. The bank's decision to raise the cash rate to 4.6% in September was unanimous, a stark contrast to earlier meetings where some members expressed concerns about higher rates and the Middle East conflict's economic effects.
Minutes from the September meeting, to be released on Tuesday, will provide deeper insights into the board's decision-making. While Governor Michele Bullock maintains that the labor market is still tight, the unemployment rate has risen to 4.6% in August, surpassing the bank's forecast of 4.5% for the December quarter. Westpac economist Ryan Wells noted mixed signals from the labor market, with rising unemployment driven by more people seeking work.
Despite the unemployment rate increase, labor supply has surged, with the participation rate hitting 67.1% in August. Job growth and job ads remain strong, but business hiring intentions appear to be weakening. Wells anticipates a 20,000 increase in employment for September, down from August's 40,000, with the unemployment rate likely holding steady at 4.6%. Annual wage growth also dropped significantly from 4.5% in August to 2.2% in September.
James Keene, managing director of Employment Hero, noted that small and medium businesses are struggling to retain staff amid thinning margins. Payroll data from over 23,000 businesses showed a 0.8% rebound in hiring for September, though overall hiring momentum has slowed since March. The NAB business confidence survey, due on Tuesday, will provide further insights into employers' hiring plans. Meanwhile, Wall Street investors are focusing on third-quarter earnings and inflation data for clues on Federal Reserve intentions.