Australia’s period of falling unemployment has possibly come to an end. After falling below 5% in late 2018, Australia’s jobless rate remained around that mark until March 2019 when it ticked up to 5.1%. It then moved up to 5.2% where it remained for the next four months. During this time, leading indicators softened and economists expect a third rate for the year shortly, along with more cuts in 2020.
The latest Labour force figures have now been released and they indicate the number of people employed in Australia grew at a pace which was not fast enough to stop the unemployment rate from increasing. The report shows the total number of people employed in Australia increased by 34,700 in August while the unemployment rate slipped from 5.2% to 5.3%.
After the report was released, Felicity Emmett, a senior economist at ANZ said the figures sent a mixed message, with the RBA “likely to be disappointed by the gradual rise in the unemployment rate…” She expects a cut at the RBA’s October meeting “given its focus on the labour market…”
Market expectations prior to the report’s release were for 15,000 new positions to be created and for the unemployment rate to remain at 5.2%. However, investors and traders reacted to the figures with a surge in demand for low-risk assets. By the end of the day, 90-day bank bills remained unchanged at 0.97% but 3-year, 10-year and 20-year ACGB yields had all dropped by 8bps to 0.75%, 1.06% and 1.46% respectively.