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The labour market economy remains strong despite economic headwinds continuing to blow, according to the latest Australian Macro Weekly report from Australia and New Zealand Banking Group Limited (ANZ).
The report, authored by ANZ head of Australian economics Adam Boyton (pictured), revealed that on average, employment growth has maintained a strong pace of generating as much as 45,000 jobs a month for the last six months. However, this resilience in employment set a diametric contrast against the softer growth noted in recent quarters of GDP.
ANZ Research pointed out that the strength in employment creates tension with the ongoing soft pace of GDP growth. This simply meant either a possible pickup in GDP growth in the September quarter or continuing poor productivity performance by the labour force.
The report further indicated the notable increase in working hours, moving 2.4% year-on-year to September. This uptick in working hours highlighted the labour market’s vibrance even as other economic indicators remain subdued.
ANZ Research likewise showed that the increase in labour force participation indicated continuous adjustment on the supply side of the labour market. This has contributed to a small increase in the unemployment rate over the past six months, viewed as a positive sign for inflation control.
Despite the strong employment figures, ANZ Research continues to forecast the first interest rate cut by the Reserve Bank of Australia (RBA) in February 2025. However, the report noted that this timeline might require a broader easing in labour market conditions.
The next significant data point is anticipated to be the third-quarter Consumer Price Index (CPI) release on 30 October. The bank forecasts headline inflation of 0.3% quarter-on-quarter and trimmed mean inflation of 0.8% quarter-on-quarter.
What do you make of the strong growth in employment that Australia is experiencing despite economic challenges? Share your thoughts on how this might impact you in the coming months.
