As Jobs Market Cools, Pressure Eases on RBA
Strong population growth and individuals re-entering the workforce are contributing to an increase in the labor supply, which is in turn helping to maintain wage growth at a level that aligns with managing inflation.
Australian employers continue to hire, however, the workforce is expanding at a faster rate than the number of new jobs being generated, a trend that is positive for borrowers anticipating interest rate cuts.
The slight increase was slightly above expectations, but job creation exceeded expectations, with employment growing by 38,500 jobs following a decrease of 5,900 jobs in the previous month.
Economists Ryan Felsman and Craig James from CommSec noted that workforce growth was outpacing job creation, despite jobs being added at a faster pace than anticipated.
They mentioned that the 4.1 percent unemployment rate was a positive development in the context of efforts by the central bank to control prices while maintaining “full employment.”
CommSec economists stated that the combination of strong population growth and people rejoining the workforce was boosting labor supply and helping to sustain wage growth at a level that aligns with managing inflation.
Related Stories
Indicators of cautious hiring in a sluggish economy were evident in the April data, showing a growth in part-time employment by 44,600, while full-time jobs declined by 6,100.
Adam Boyton, ANZ’s head of Australian Economics, noted a preference for part-time hires, a slightly rising unemployment rate, decreased hours worked, and moderating wage growth as signs of a softening labor market.
He also cautioned that the increase in unemployed individuals in April could partly be attributed to more people waiting to commence new job roles, suggesting that the unemployment rate might decline in the following month as these workers begin their new positions.
Treasurer Jim Chalmers highlighted the creation of 820,000 new jobs under the government’s watch, the highest number for a first-term government, but acknowledged emerging challenges in the job market.
Shadow Treasurer Angus Taylor expressed concern over the alarming rise in the unemployment rate and criticized the federal budget released on May 14 for lacking a plan to enhance living standards.
He stressed the need for a budget that addresses inflation, cost-of-living pressures, supports small businesses, incentivizes work, and maintains budget discipline and transparency to improve living standards.
