Australia Has Largest Back-to-Back Full-Time Job Gain Since 1988By
Jobless rate edges higher as participation rate reaches 65%
Western Australia sees biggest employment gains by state
Australia recorded the biggest back-to-back increase in full-time hiring in 29 years as the center of its mining boom showed signs of exiting a protracted investment slump.
- Employment advanced 14,000 from May; economists forecast 15,000 gain
- Jobless rate rose to 5.6%; estimate 5.6%
- Full-time jobs surged by 62,000 after a 53,400 gain in May, the biggest two-month increase since January 1988; part-time roles fell 48,000
- Participation rate rose to 65% from 64.9%
- Western Australia added 6,900 positions, the most by state, showing signs of recovery from the end of the mining investment boom
The data are likely to embolden Aussie hawks who suspect the central bank is considering its first interest-rate increase since 2010. The Reserve Bank of Australia said this week the labor market’s recent strength removes “some of the downside risk” to its wage growth forecasts, while estimating a neutral cash rate of 3.5 percent -- two percentage points above its current record-low level. Traders are pricing in a 65 percent chance of a May rate hike, with attention now turning to second-quarter inflation data due Wednesday.
The caveat is that most of the recent employment growth has been in low-wage sectors, while the highest-paying industries -- mining, utilities and finance -- have all shed jobs, according to Citigroup Inc.
- “Despite the pick-up in momentum, there is still plenty of excess capacity in the labor market which will prevent a sustained pick-up in wage growth for some time yet,” said Kate Hickie at Capital Economics. “This is one reason why we expect the RBA to keep rates on hold throughout 2017 and 2018.”
- “Simply, businesses say that operating conditions are good. Corporate Australia is spending and hiring,” said Craig James, a senior economist at the securities unit of Commonwealth Bank of Australia. “Should the Reserve Bank start thinking about lifting rates? Perhaps the Reserve Bank can start thinking, but it is still too early to lift rates. Capacity is still available and global competition is keeping inflation in check.”
- Western Australia saw largest increase in participation rate
- Monthly hours worked in all jobs increased by 8.9m hours in June
- South Australia remains the state with highest jobless rate at 6.6%
— With assistance by Tomoko Sato