Australia employment surges in Nov, jobless rate hit 1-1/2 year high

A worker adjusts the electrical wiring of traffic lights in central Sydney, Australia, June 16, 2017. Picture taken June 16, 2017. REUTERS/Steven Saphore/File photo

SYDNEY  – Australia employment far outpaced expectations for a second straight month in November as firms added to full-time staff, yet the jobless rate still rose to a 1-1/2 year high as more people went looking for work.

Figures from the Australian Bureau of Statistics on Thursday showed net employment jumped 61,500 in November from October, when they rose a revised 42,700. Market forecasts had been for an increase of around 11,000.

The jobless rate still rose to 3.9 percent, from an upwardly revised 3.8 percent, the highest reading since May last year. The participation rate climbed to a record high of 67.2 percent.

The Australian dollar extended gains to be up 0.6 percent to $0.6705, the highest since early August, but three-year bond futures are still up 22 ticks to 96.28 thanks to easing expectations for global central banks next year.

READ: Australia wages posted largest rise on record in Q3

Record inflows of migrants and students have boosted the supply of labor to meet demand, so while employment was a rousing 3.2 percent for the year to Nov, but the labor force grew by 3.6 percent.

This expansion of supply means the labor market is not the main driver of inflation and with the Federal Reserve signaling rate cuts in the year ahead, futures are still pricing in that the Reserve Bank of Australia is now done tightening.

The RBA last week kept interest rates unchanged at a 12-year high of 4.35 percent and left the door open to another move. It has jacked up interest rates by a whopping 425 basis points in the most aggressive tightening campaign in the bank’s history to tame inflation.

READ: Australia’s central bank holds rates steady until at least February

The breakdown showed full-time employment rose by 57,000 in November.

Nonetheless, the data added to early signs of loosening in the market, with the ABS noting a slowdown in hours worked.

“The slowing in hours means that overall growth rates in employment and hours worked are now similar over the past 18 months,” said Bjorn Jarvis, ABS head of labor statistics.

“The narrowing gap between these two growth rates suggests that the labor market is now less tight than it has been.”

Vacancies have also been ticking lower as positions get filled. Job ads on Australia’s largest employment site SEEK, fell 4.3 percent in November, although they’re still over 13% higher than a year ago, suggesting the demand for workers is still strong.