By: Matt Simpson, Market Analyst
Australian employment fell by 15,600 in a single month as part-time jobs dropped by 32,200, their weakest showing in four months. Even so, the Australian labor market is cooling too slowly to shift a hawkish Reserve Bank of Australia, with unemployment at 4.5% after more than two years of gradual increases. That rate is still below its long-term average, and full-time employment edged higher over the same month. With markets and all of Australia's Big Four banks already backing a rate hike, the labor data now matters most for how far the Reserve Bank of Australia goes after that.
Matt Simpson, StoneX Media Market Analyst, has spent 15 years analyzing and trading forex, indices, gold and oil across the Asia-Pacific region. Based in Brisbane, he specializes in FX macro, technical analysis and market sentiment, and holds the CFTe and MSTA technical analysis credentials.
The Australian unemployment rate sits at 4.5%, the bottom of the 4.5 to 5% range that Reserve Bank of Australia Governor Michele Bullock has linked to taking the heat out of inflation. That leaves the central bank room to keep tightening, and in Simpson's words, "The closer we get to 5%, the greater the odds they may become more cautious." Reaching the top of that range would take a real shift, because unemployment is "not exactly a volatile figure" and has crept higher for more than two years. As a result, a single soft jobs report is unlikely to move the Australian labor market far enough to change the Reserve Bank of Australia's course.
Australian employment fell by 15,600 in one month because part-time roles dropped by 32,200, even as full-time employment edged higher. Simpson reads the figures as a little soft around the edges rather than a warning sign, particularly after a much larger gain the month before. For the Reserve Bank of Australia, a labor market easing this gradually offers little reason to step back from a hawkish stance. "The employment population ratio and participation rate both topped out between 2 and 4 years ago, and are gently moving lower, but they do still remain high by historical standards," Simpson says.
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Matt Simpson, StoneX Media Market Analyst
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A rally of more than 5.4% in the Australian dollar stalled at a zone where three Fibonacci measures converge, and the reversal has broken the uptrend that carried it. The structure behind that resistance, and the daily closes that separate a pullback from a trend change, explain what the Australian dollar is testing now.
The Australian labor market is softening at the edges, with part-time job losses pulling employment lower as unemployment holds at 4.5%. That gradual pace leaves the Reserve Bank of Australia room to stay hawkish, with participation still high by historical standards.
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