Australia added more jobs than expected in August, the 11th consecutive months of jobs growth, but economists do not expect this to translate into wage growth as there is still slack in the labour market.
Figures from the Australian Bureau of Statistics showed the country added 54,200 jobs in August, up from 27,900 in July and ahead of a median forecast of 15,000 from economists surveyed by Reuters. Overall unemployment held at 5.6 per cent.
Gareth Aird, senior economist, Commonwealth Bank of Australia said the improvement in the labour market over the past six months “points to a lift in economic output over H2 2017″.
Mr Aird added:
The improvement in the labour market over the past six months is quite remarkable. Employment growth has been phenomenal and there has been a gradual tightening in the labour market. From a monetary policy perspective it is about what this improvement means for wages and inflation. From our vantage point, despite the solid jobs growth, we think that we are still some way from labour market slack being eroded sufficiently to put genuine upward pressure on wages. As such, we have the RBA on hold until late 2018. However, with each robust monthly employment report the risk of a rate hike before late 2018 inches higher.
Paul Dales, chief Australia and New Zealand economist for Capital Economics, said that despite figures showing that 77 per cent of the 326,000 jobs created over the past year were full-time roles, the number of hours worked per employee has fallen 0.2 per cent over the same period.
Mr Dales added that “the surge in the demand for workers isn’t significantly reducing spare capacity as the supply of labour is rising rapidly too”.
Pointing to the quarterly underutilisation rate, which measures those who have a job but want to work more hours as well as the unemployed, Mr Dales said this number would need to fall to 12 per cent from its current 14.1 per cent “before we can say that the amount of spare capacity…