SYDNEY • Australia’s labour market softened a little in November in a setback for the Reserve Bank of Australia’s (RBA) drive for higher wages and faster inflation.
Unemployment climbed to 5.1% and underemployment also rose, lifting the under utilisation rate that combines both gauges to 13.6%, statistics bureau data showed in Sydney yesterday.
On a more positive note, the rise in joblessness was driven by more people seeking work.
“The under utilisation rate has a strong relationship with wage growth,” said an economist who previously worked at the central bank.
“Unfortunately, this suggests that sluggish wage growth will again be a feature of the economy in 2019.”
The data drew little reaction from markets due to its mixed nature: Employment jumped 37,000, but full-time jobs fell and hours worked declined. The labour market is a key metric for the RBA as it uses a record-low cash rate to juice economic growth and push down unemployment, with the goal to force employers to offer higher pay to workers.
The strategy has paid dividends, with employment growing strongly this year and last, and the jobless rate largely held up by an expanding labour force — also a sign of optimism.
But an accelerating slump in property prices that culminated in weaker economic growth last quarter has started to spook markets.
Investors are now beginning to doubt the RBA’s regular refrain that the next rate move is likely to be a hike, with money markets pricing in a slim chance of a cut in 2019.