Australian Employment
Employment figures from Australia remained a focal point following the RBA decision to leave the cash rate unchanged.
The Australian unemployment rate remained unchanged at 3.7% in August.
According to the ABS,
- The participation rate increased to 67.0%, while monthly hours worked decreased.
- Employment jumped by 63.9k while full employment rose by a modest 2.8k.
The latest figures showed that labor market conditions steadied after a rocky July. In July, full employment slid by 18.7k. As a result, the Australian unemployment rate increased from 3.5% to 3.7%.
Weaker labor market conditions impact consumer spending and service sector activity. Final goods consumption and services account for 70% of the Australian economy. A continued uptrend in unemployment would reduce consumption and impact service sector activity, leaving the Australian economy exposed to the risk of a recession.
Significantly, China’s economic woes have had a limited impact on Australian labor market conditions. China accounts for one-third of Australian exports. With the Australian trade-to-GDP ratio at about 50, trade accounts for 20% of Australian jobs.
AUD to USD Reaction to the Employment Report
Before the employment numbers, the AUD/USD fell to a low of $0.64139 before surging to a pre-stat high of $0.64489.
However, in response to the employment report, the AUD/USD jumped to a post-stat high of 0.64537 before falling to a low of $0.64337.
This morning, the AUD/USD was up 0.27% to $0.64386.
Next Up
Economic indicators from the US could retest investor conviction on a Fed pause on interest rate hikes.
US producer prices, jobless claims, and retail sales figures will draw interest. A pickup in producer prices, steady labor market conditions, and a jump in retail sales could signal the need for more tightening to curb demand-driven inflation.
However, the numbers need to be better than expected to shift bets on the Fed after the recent US CPI Report.
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