Australian employment surged by the most this year in June as firms took on more full-time workers, yet the jobless rate held steady as more people entered the labour force in a trend that has curbed much-needed wage gains.
Figures from the Australian Bureau of Statistics (ABS) released on Thursday showed 50,900 net new jobs were added in June, blowing past expectations of 17,000. Of those, 41,200 were in full-time positions.
It was the largest monthly gain since November and will be a big relief to policy makers after a run of softer months. Annual jobs growth also picked up to 2.8 per cent, well ahead of the US pace of job creation of 1.6 per cent, according to a Reuters report Thursday.
The unemployment rate held steady at 5.4 per cent, but only because more people went looking for work. The participation rate jumped to 65.7 per cent, just a tick below the all-time high, as more women entered the labour force.
With labour supply still expanding to meet demand, there has been less upward pressure on wages and inflation and thus no near-term trigger for a rise in interest rates from the Reserve Bank of Australia (RBA).
“This report will give them a bit of confidence that some of the weakness we saw in employment earlier this year was temporary,” said RBC senior economist Su-Lin Ong.
“Having said that, there is still a lot of slack in the market,” she added. “You still have to see ongoing above trend and above average job growth to absorb that spare capacity, and you need more prints of this magnitude to ease the slack and lift wages growth.”
The RBA has held rates at a record low 1.5 per cent for almost two years and markets imply scant chance of a move until well into 2019. Interbank futures only show a 50-50 chance of a hike by August next year.