Investing.com-- Australia’s labor market grew more than expected in November as demand for skilled workers remained robust, although an unexpected increase in unemployment and fewer hours worked indicated some cooling.
The total number of employed people grew by 61,500 in November, data from the Australian Bureau of Statistics showed on Thursday. The reading was well above expectations for growth of 11,000 people, and also extended strong gains from the 55,000 rise seen in October.
The higher figure was accompanied by a record-high participation rate- ie the percentage of the working age population that is in the workforce or seeking work- of 67.2%.
But other factors showed that the labor market was cooling from a strong run over the past year. The unemployment rate unexpectedly increased to 3.9% from 3.8%, while growth in monthly hours worked largely stagnated.
“The slowing in hours means that overall growth rates in employment and hours worked are now similar over the past 18 months. The narrowing gap between these two growth rates suggests that the labour market is now less tight than it has been,” Bjorn Jarvis, ABS head of labour statistics said in a note.
While unemployment still remained close to 40-year lows, the unexpected increase suggested that the labor market was seeing some signs of cooling amid higher interest rates and restrictive monetary conditions.
The Reserve Bank of Australia had targeted some cooling in the labor market in its quest to reduce inflation, given that the space is one of the key factors behind robust consumer spending.
Australian inflation remained sticky in recent months, staying well above the RBA's annual target due to steady consumer spending- a trend that saw the RBA hike rates in November.
While the bank kept rates steady during its December meeting, it still warned of potential upside risks to inflation, which could elicit more rate hikes in 2024.