The overall trend of a falling unemployment rate remains intact as the Australian economy keeps on producing new jobs. However, as the population increases at a brisk pace, the unemployment rate has not been reduced quickly, although it has managed to fall from 5.60% to 5.0% over the 12 months to December 2018. Economists are not unanimous this process will continue.
The ABS has now released employment estimates for January. The report indicates the total number of people employed in Australia increased by 39,100 and the unemployment rate remained unchanged at 5.0%. While some economists described the report as evidence of “ongoing strength” in the labour market, others are suggesting the unemployment rate will rise later in 2019.
Market expectations prior to the report’s release were for 15,000 new positions to be created and for the unemployment rate to stay at 5.0%. Despite this, local bond yields and the Aussie dollar finished the day lower after Westpac’s chief economist publicly predicted rate cuts in August and November of this year. 3-year ACGB yields dropped by 5bps to 1.60%, 10-year yields fell by 4bps to 2.06% and 20-year yields lost 3bps to 2.44%. The Aussie dollar initially jumped from 71.60 US cents to 72.00 US cents but it then fell during the afternoon back to where it started.