Australia: Labour market remains healthy – UOB
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Economist at UOB Group Lee Sue Ann reviews the latest release of the Australian labour market report.
“Australia’s seasonally adjusted employment decreased by 40,900 people (0.3%) in Jul, disappointing expectations for a gain of 25,000 even as the unemployment rate fell to 3.4% in Jul, the lowest since Aug 1974. Meanwhile, seasonally adjusted wage price index (WPI) rose for the third consecutive quarter, up 0.7% q/q in 2Q22. Annual wage growth came in at 2.6% y/y, the highest annual rate of wage growth since Sep 2014.
“Overall, the Australian labour market looks to tighten further in the next couple of months before slowing growth will likely push the jobless rate higher back towards the 3.8%-4.0% levels. Wage growth is also expected to pick up to over 3% by 2023.”
“Following the 50bps hike earlier this month, the Reserve Bank of Australia (RBA) is thus expected to continue pushing interest rates higher. We now believe the RBA can afford to raise the cash rate by a further 40bps to 2.25% at the 6 Sep meeting, given the extremely tight labour market and soaring inflation.”
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