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Australian jobs soar in August, unemployment stays still

Key Points
  • Australian employment exceeded expectations in August while the jobless rate held steady.
  • Data from the Australian Bureau of Statistics showed 44,000 net new jobs were added in August compared to analyst expectations an increase of 15,000. 
Job seekers browse job notices at a jobs and skills expo run by the Australian government in Melbourne, Australia.
Carla Gottgens | Bloomberg | Getty Images

Australian employment blew past all expectations in August while the jobless rate held steady as more people joined the labor force, a mix that works against wage growth even as it supports consumer spending power.

Figures from the Australian Bureau of Statistics (ABS) released on Thursday showed 44,000 net new jobs were added in August when analysts had looked for an increase of 15,000. Of those 33,700 were in full-time position.

Annual jobs growth of 2.5 percent was well ahead of the U.S. pace of job creation of 1.6 percent.

The larger-than-expected jump will be a relief to policymakers who are counting on the ongoing labor market tightness to ultimately lift wage growth which is crawling near record lows.

The August unemployment rate held steady at a six-year trough of 5.3 percent while the underemployment rate - those in jobs but wanting more hours - declined to 8.1 percent from 8.5 percent in May.

That drop sent the underutilization rate to the lowest in over five years at 13.4 percent.

"The best news was the decline in the underutilization rate," said Callam Pickering, APAC Economist for global job site Indeed.

"The underutilization measure is more highly correlated to wage growth than the traditional unemployment rate. So this development is a welcome one for future wage growth," Pickering said.

"Although we still have a long way to go."

The data provided only a brief fillip to the Australian dollar as an increase in the official cash rate to 1.75 percent is still seen as a distant prospect.

The ABS figures showed the participation rate rose to 65.7 percent, matching a record high hit earlier this year.

July employment growth was also revised downwards to show a drop of 4,300 from the previously reported 3,900 fall.

Australia's labor market has remained strong since early 2017 but that has yet to translate into bigger pay awards for workers.

Even so, the weak wage growth has so far not been a deterrent to economy-wide spending as the unemployment rate has steadily fallen.

Data out earlier this month showed the A$1.8 trillion economy accelerated at a brisk 3.4 percent pace last quarter with household consumption contributing handily, yet there was little sign of wage or price pressures. 

As a result, the Reserve Bank of Australia has held rates at a record low 1.5 percent for more than two years now as it awaits a revival in consumer prices and further falls in unemployment. 

Markets imply scant chance of a move until 2020, with interbank futures only showing a 50-50 chance of a hike by Christmas next year.