Reserve Bank’s Andrew Hauser says strong jobs market is ‘good news’ as record share of Aussies want to work

The pace of Australia’s jobs growth is “surprising” and has been boosted by a “strikingly high” number of people wanting to work, the Reserve Bank’s deputy boss has said. Employment soared by 64,000 in September, extending a run of stronger-than-expected performances that will make the central bank more cautious about cutting interest rates. The jobless rate was just 4.1 per cent. It has been slowly lifting from 48-year lows after the RBA sharply tightened borrowing costs. RBA deputy governor Andrew Hauser acknowledged jobs had been running hotter than predicted, but said unemployment was moving as expected. “We haven’t been surprised by unemployment, and unemployment is the traditional measure . . . of tightness in the labour market,” he told the Commonwealth Bank Global Markets Conference in Sydney on Monday. “We have been a bit surprised by the strength of employment growth.” Mr Hauser said the two trends reflected the record high participation rate — the share of working-age Australians either in jobs or looking — which is north of 67 per cent. Population growth has been running at full steam amid strong migration, adding more workers into the economy. “(It’s) strikingly high participation, both by comparison with Australia’s past and also most other countries as well,” Mr Hauser said. “It’s quite a good news story these labour market outcomes. Both the level of unemployment, at or near historical lows . . . (and) the level of labour market participation (is) high and having risen.” The central bank deliberately took a strategy to raise interest rates less than other countries to keep unemployment under control. However, there’s uncertainty about why the jobs market is booming at a time economic growth is slow. Mr Hauser said businesses could be hiring and retaining staff because they expect demand to lift. Alternatively, the economy’s supply side could be weak, with companies struggling to lock in the staff that match what they need. Financial markets were now more accurately reading the RBA’s intentions on interest rates — which would not move yet because inflation was “still too high”, he said. Underlying inflation was 3.4 per cent in the year to August, above the bank’s 2 to 3 per cent target. On Friday evening, markets were expecting just a 10 per cent chance of a rate cut at the upcoming RBA meeting in November. A cut is not fully priced in until April. “Right now there does seem to be a relatively decent understanding (in investment markets) about what the RBA is trying to achieve,” Mr Hauser said.

Reserve Bank’s Andrew Hauser says strong jobs market is ‘good news’ as record share of Aussies want to work

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