The odds of a near-term interest rate hike have increased dramatically following Thursday’s labour force report from the Australian Bureau of Statistics, which showed that headline unemployment declined to 4.1% in December, down from 4.3%.
The key statistics are illustrated in the table below from Alex Joiner at IFM Investors:
Most notably, the number of employed people was up 65,000 in December, with both full-time (55,000 people) and part-time (10,000 people) jobs contributing to this rise.
The number of hours worked was up by 0.4%, in line with the 0.4% rise in employment.
The participation rate also improved slightly, and the underemployment rate fell by 0.5% to 5.7% in December.
In other words, it was an unambiguously strong result, with Australia’s trend unemployment rate now tracking well below the RBA’s November Statement of Monetary Policy forecast.
The strong result lifts the odds of the RBA hiking at its February meeting. All eyes now turn to next week’s quarterly CPI inflation release from the ABS.
