Lower Interest Rates Remain out of Reach Despite Creation of One Million New Jobs
Exciting news for Australians who are currently unemployed may not be as welcome for those who have mortgages.
In September, Australia’s job market exceeded expectations by adding 64,100 new positions, including 51,600 full-time roles, which was much higher than the anticipated 25,000.
This resulted in the unemployment rate dropping to 4.1 percent, in line with the revised figure from the Australian Bureau of Statistics (ABS) for August.
Analysts had predicted a much lower number of new jobs in September, estimating it to be around half of the 47,500 created in August.
Treasurer Jim Chalmers mentioned that over a million jobs have been generated since the Albanese government took office.
Chalmers said, “This is the first time any government, regardless of political affiliation, has overseen the creation of a million new jobs in a single parliamentary term. We are pleased that the majority of these new jobs are full-time, with about half being for women.”
Another landmark was achieved as over 10.03 million Australians now have full-time employment, surpassing the 10 million mark for the first time.
The participation rate, which represents the proportion of working-age individuals in the labour market, hit a record high at 67.2 percent, with total hours worked reaching 1.97 billion.
In September 2024, approximately 482,000 people entered the workforce, while around 391,000 left the workforce.
Despite the strong job growth, analysts caution about a potential slowdown due to fewer job advertisements and vacancies.
Both the Treasury and the Reserve Bank of Australia (RBA) predict a slight increase in the unemployment rate to around 4.4 to 4.5 percent by the middle of the following year, although it will still be lower compared to most years since the mid-1970s.
The tight labour market is also raising concerns about wage inflation. Many economists believe that the RBA may be hesitant to reduce the Official Cash Rate (OCR) in the upcoming meetings in November and December due to this robust job data. Prior to the recent data release, investors had speculated a 40 percent chance of a rate cut by December and a 70 percent chance by February.
Although the latest ABS data does not provide a breakdown of job gains by sector, Jobs and Skills Australia, a Federal Government agency, predicts that the largest employment growth over the next decade will be seen in the categories of Managers and Professionals and Community and Personal Service Workers.
These two groups accounted for 39.1 percent of total employment in 2023 and are projected to make up 40.7 percent by 2033.
