- The Australian unemployment rate held steady at 3.7% in August.
- Participation rate climbed to 67.0%, despite a dip in monthly hours worked.
- China’s economic challenges showed minimal strain on Australian employment.
Employment figures from Australia remained a focal point following the RBA decision to leave the cash rate unchanged.
The Australian unemployment rate remained unchanged at 3.7% in August.
According to the ABS,
- The participation rate increased to 67.0%, while monthly hours worked decreased.
- Employment jumped by 63.9k while full employment rose by a modest 2.8k.
The latest figures showed that labor market conditions steadied after a rocky July. In July, full employment slid by 18.7k. As a result, the Australian unemployment rate increased from 3.5% to 3.7%.
Weaker labor market conditions impact consumer spending and service sector activity. Final goods consumption and services account for 70% of the Australian economy. A continued uptrend in unemployment would reduce consumption and impact service sector activity, leaving the Australian economy exposed to the risk of a recession.
Significantly, China’s economic woes have had a limited impact on Australian labor market conditions. China accounts for one-third of Australian exports. With the Australian trade-to-GDP ratio at about 50, trade accounts for 20% of Australian jobs.
AUD to USD Reaction to the Employment Report
Before the employment numbers, the AUD/USD fell to a low of $0.64139 before surging to a pre-stat high of $0.64489.
However, in response to the employment report, the AUD/USD jumped to a post-stat high of 0.64537 before falling to a low of $0.64337.
This morning, the AUD/USD was up 0.27% to $0.64386.
Economic indicators from the US could retest investor conviction on a Fed pause on interest rate hikes.
US producer prices, jobless claims, and retail sales figures will draw interest. A pickup in producer prices, steady labor market conditions, and a jump in retail sales could signal the need for more tightening to curb demand-driven inflation.
However, the numbers need to be better than expected to shift bets on the Fed after the recent US CPI Report.
The ECB monetary policy decision and press conference will also garner interest.