Defying the Odds: Australia Jobs Dip Despite Low Unemployment Rate 

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Australia’s employment dropped in December after experiencing an immense increase, suggesting that the labour market is slowing down.

The Australian Bureau of Statistics (ABS) released figures on Thursday that revealed an unexpected drop in net employment from November’s revised tally of 58,200 to 14,600. This figure was below expectations and estimations for a 22,500 increase.

The Australian dollar dropped 0.5% to $0.6906 in response to the market’s reaction, while three-year bond futures rose 18 ticks to 96.980, indicating a yield of 3.02%. The unemployment rate remained at its 48-year low of 3.5%, and even more encouragingly, the participation rate slightly decreased from 66.8% in November to 66.6%.

December saw a vigorous 17,600 additional full-time jobs, while an impressive 452,000 job gains marked the 12 months ending in December. It is positive news for our economy.

The strong employment growth through 2022, along with high participation and low unemployment, continues to reflect a tight labour market,” said Lauren Ford, head of labour statistics at the ABS.

Markets are anticipating the Reserve Bank of Australia (RBA) will hike its cash rate by another quarter point to 3.1% when it convenes on Feb. 7 due to its resilience and savvy predictions in monetary policy shifts.

Futures imply around a 60% probability that rates will increase. However, there is still an even 40% chance they may remain stagnant as recent rises have only just come into effect, and mortgage payments are being felt across households nationwide.

Australia’s labour market is thriving, with vacancies reaching record-breaking highs and wages surging due to the strong demand for employment. Migration has returned since Australia reopened its borders early last year -creating an influx of workers that will continue to fuel the economy.

This week’s ABS data showed a record-breaking increase in temporary migration between July and November, with net arrivals totalling 180,000. Skilled visa holders, those on work visas, and students are all included in this figure.

It represents important progress in alleviating labour supply constraints which featured prominently in 2022,” said Ryan Wells, an economist at Westpac.

Given the extraordinary influx of people, the government’s goal to achieve 235,000 net migrants in 2022/23 will be surpassed.

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