SYDNEY (Reuters) - Australian employment jumped again in December and the jobless rate surprisingly fell, a generally upbeat report that should comfort the central bank as the labour market remains one of the strongest parts of the economy.
Figures from the Australian Bureau of Statistics (ABS) on Thursday showed a net 21,600 new jobs were created in December, down from an upwardly revised 39,000 the month before but surpassing market forecasts of a 16,500 increase.
The overall trend in Australia’s labour market has been robust over the past couple of years with annual job growth of 2.2 percent, faster than the 1.6 percent rise in population. Full-time positions expanded by almost 2 percent in 2018.
Thursday’s data will be welcomed by policymakers who are counting on labour market strength for a long-awaited pick up in wage growth and inflation in the face of a downturn in the property market.
Some details in the report, however, were not quite as impressive, with full-time positions that tend to offer higher wages and greater security declining by 3,000, adding to falls in November.
That means the increase in employment in December was entirely led by part-time work.
The participation rate eased to 65.6 percent in December, helping bring down the unemployment rate to 5.0 percent - an equal 6-1/2 year low touched in September and October.
The underemployment rate fell, too, to 8.4 percent but stayed above its historical average, pointing to still-high spare capacity in the labour market.
“High levels of slack continue to weigh on wage growth, despite a decline in the unemployment rate,” said Callam Pickering, APAC economist for global job site Indeed.
“Softer economic conditions, including falling property prices, suggest that employment growth will ease somewhat in 2019.”
Australia’s once-booming property market is in a sharp downturn with prices in Sydney falling at the fastest pace in two decades. Many economists expect home values to fall further this year.
Yet, leading indicators of labour demand still point to further employment growth in Australia in a positive sign for household spending. An index of vacancies released by the department of jobs and small business on Wednesday showed there were 185,547 skilled job vacancies in December, the highest in 6-1/2 years.
That should give the Reserve Bank of Australia’s (RBA) confidence that the A$1.8 trillion economy is on the right track. The RBA has held the cash rate at a record low 1.50 percent for almost 2-1/2 years now while repeatedly signalling the next move would be an increase.
With the latest data unlikely to budge the RBA from this neutral stance, the local dollar rose slightly to $0.7159 from $0.7146 before the job report.
All eyes will now be on fourth-quarter inflation report due next week with economists generally expecting growth in prices to slow, an outcome that could add to the case for a rate cut.
Interest rate futures are now pricing in an almost 60 percent chance of a cut by December, a sharp turnaround from expectations of a hike just a couple of months back.
Reporting by Swati Pandey and Wayne Cole; Editing by Kim Coghill & Shri Navaratnam