Employment in Australia rose surprisingly in July, while the jobless rate declined in the month. Jobs in the country grew a solid 26,000 in July. The strength was seen mainly in part-time employment that increased by 72,000. However, full-time jobs weakened in the month, dropping by 45,000, reversing the gain of 44,000 recorded in June. The weakness in full-time job raises concerns about the health of Australian labor market.
Overall in 2016, full-time employment jobs have dropped at an average of 9000 per month, whereas part-time jobs have increased by an average of 19,000. Reflecting this, total number of hours worked have been largely flat in 2016, following a rise of 0.8 percent in the second half of 2015. Meanwhile, the jobless rate in July dropped to 5.7 percent.
According to an ANZ research report, forward indicators for the Australian labor market are mixed. Growth in ANZ job ads has decelerated in the last few months; however, measures of capacity utilization and surveyed profitability and business conditions continue to indicate towards a strong labor market.
The Reserve Bank of Australia is expected to be pleased by the drop in the jobless rate that has alternated between 5.7 percent and 5.8 percent for nearly all of 2016. But the lack of rebound in the labor market in the last six months and the continuing weakness in wage growth indicates towards a still significant amount of spare capacity in labor market, stated ANZ. Significantly, subdued wage growth is expected to continue.
“While we see the cash rate on hold at 1.5%, persistently low inflation, a softer labour market and a high exchange rate should keep the risks tilted to the downside”, added ANZ.