Employment in Australia was seen rising sharply in the month of June. The increase in the employment came as businesses were seen taking on more full-time workers. Offsetting the gains in the employment, the Australian unemployment rate held steady as more people were seen looking for work.
Data from the Australian Bureau of Statistics (ABS) showed that in the month of June, new net jobs of 50,900 were added during the month. The headline figure beat estimates of an increase of 17,000.
From the 50,900 jobs added, over 41,200 jobs came from full-time jobs.
The data showed that it was the largest monthly gain since November and the unemployment report is likely to bring some relief to policymakers at the Reserve Bank of Australia. The Australian labor markets were seen running at a subdued pace over the past few months.
The annual pace of job growth increased to 2.8% and this put Australia ahead of the U.S. pace of job growth which is at 1.6%.
Despite the job gains during the month, the Australian unemployment rate held steady. This was attributed to more people entering the job market, actively looking for work. As a result, the unemployment rate was steady at 5.4%.
The participation rate which measures the number of people looking for work ticked higher to 65.7%.
Australian wages have remained a major concern and has increased at a subdued pace. The Australian economy is expected to absorb more workers which are in turn expected to keep wages in check.
The slower pace of wage gains is also expected to keep inflation at the current levels. This could potentially offer the policymakers at the RBA more room to stay on the sidelines as they leave interest rates unchanged.
The RBA has left interest rates steady at 1.5% for nearly two years with forwarding guidance pointing to the expectation that the first rate hike could come only in the middle of 2019.
Still, the June jobs report is quite encouraging for the policymakers as brings more confidence after the central bank had remained hopeful over the past months that the labor markets would pick up. Despite the positive news, analysts believe with still a lot of slack in the labor market, Australia’s job market should continue in the current trend and post above-average jobs in order to eventually put pressure on wages and consumer prices.
Driving the labor force was an increase in employment in sectors such as health and social assistance. Growth was also seen coming from professional and technical services spanning across architecture to law and accountancy.
The future outlook for the labor market is expected to remain upbeat following the recent forward-looking indicators. Data from the Australian Bureau of Statistics (ABS) showed that job vacancies surged 24% in the year ending May 2018. Job vacancies in Australia surged to reach highs of 236,000.
The unemployment data comes after the RBA’s recent monetary policy meeting did not see any new changes from the central bank. Coming up this week, economic data will focus on the inflation report from Australia.
Economists forecast that the Australian inflation rate is expected to rise 0.6% in the quarter ending June 2018. This marks a modest increase from the 0.4% that was registered in the first quarter of the year. On an annual basis, the inflation rate for Australia is expected to rise to 2.2%, up from 1.9% in the previous quarter.
The trimmed mean CPI is tipped to rise 0.5%, marking the same pace of increase as the previous quarter and 1.9% on an annualized basis in June 2018.