Australia’s tight labour market is losing speed as 11-year high borrowing prices weigh on labour demand. Therefore, if it continues, may push up unemployment and prevent further policy tightening.
Underlying data indicate that vacancies are being filled and postings are falling as unemployment rate unexpectedly dipped to 3.6% in September. Following four percentage point interest-rate rises since May 2022, the figures are essential for the data-dependent Reserve Bank of Australia (RBA).
In order to determine whether more action is required, the RBA will examine the job situation, inflation trends, consumer spending, and global events. It has recently made reference to a “turning point” in employment.
Current governor Michele Bullock stated in June that the unemployment rate needed to rise to roughly 4.5 percent for inflation to return to goal.
After a four-meeting hiatus, the central bank will meet again on November 7 to consider the policy rate, while reaffirming that “some further tightening” may be necessary to bring inflation to its 2% to 3% objective in a reasonable period.
Australia’s population has risen in the last year, mainly to increased outside migration since the country reopened its borders during the epidemic. Economists believe that the working-age population is growing at a rate of roughly 56,000 per month, compared to a pre-Covid average of about 30,000.
