2 weeks Ago By Poppy Johnston
Job creation continues to glide past expectations in a display of labour market resilience that adds to the case for interest rates staying on hold for the rest of the year. Login or signup to continue reading In August, the unemployment rate held at 4.2 per cent and the 47,500 employment lift was almost double what forecasters had pencilled in.
Thursday's labour force data followed the United States central bank cutting interest rates by 50 basis points, leaving borrowers wondering if the Reserve Bank of Australia would follow suit. EY chief economist Cherelle Murphy said the jobs market was still a source of inflationary pressure despite moving towards a better balance over the course of a year. "With continued price pressures across the economy, a relatively tight labour market and elevated government spending, our central expectation remains that the Reserve Bank will hold the cash rate steady for the remainder of the year.
" Last week, Reserve Bank assistant governor Sarah Hunter said Australia's labour market was still tight relative to what's known as "full employment". This is the maximum level of employment consistent with low and stable inflation. Yet the dominance of part-time roles and an uptick in the underemployment rate took some of the sheen out of Thursday's jobs report.
Roughly 50,600 part-time roles were created in August while 3100 full-time jobs were shed. HSBC chief economist Paul Bloxham said public sector employment was likely behind much of the surprising strength in job creation. "Although today's monthly figures do not provide an industry breakdown, the latest quarterly figures clearly show public sector job creation has been picking up, while private sector employment has been slowing down," he said.
This was consistent with GDP data showing public demand was supporting economic activity while private demand was tapering off. Employment Minister Murray Watt made no apologies for investing in the public service. "I don't see anyone out there saying that we need fewer nurses, fewer disability carers, fewer teachers in our economy," Senator Watt told reporters on Thursday.
Opposition workplace relations spokeswoman Michaelia Cash said it was more important for employers to have the right conditions to create private sector jobs rather than rely on public sector employment. A concentration in part time jobs and an increase in hours work also suggested Australians were having to take on extra hours to make ends meet, she said. "Dark clouds are unfortunately ahead for the Australian people," Senator Cash said.
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