Australian unemployment falls, no February RBA rate cut?

author-avatar By on January 23,2020
Australian unemployment falls, no February RBA rate cut?

Photo by Damir Kopezhanov on Unsplash

Australia's unemployment rate fell to 5.1% in December, from 5.2% in November.

The ABS (Australian Bureau of Statistics) figures come as somewhat of a shock, with economists widely predicting the rate would rise to 5.3%. 

Almost 29,000 jobs were added for the month, nearly triple the 10,000 expected, while both full-time and part-time employment increased by around 9,000 people. 

ABS Chief Economist Bruce Hockman said despite the positive result, underemployment had remained steady.

"In December 2019, the trend unemployment rate decreased slightly to 5.1 per cent, its lowest level since April 2019," Mr Hockman said.

"While there has been stronger growth in part-time employment over the past year, the underemployment rate is still where it was last December, at 8.3 per cent."

After repeatedly affirming their belief that the Reserve Bank (RBA) will cut Australia's cash rate to a record low 0.5% in February, Commonwealth Bank have now revised their prediction, tweeting they believe the RBA will hold. 

No doubt this is as a result of the figures pushing the unemployment rate closer to the RBA's goal of 4.5% unemployment, along with strong November retail sales.

Elsewhere, economists seem to be split: AMP Chief Economist Shane Oliver said closer examination of the numbers showed that full time job growth actually fell by 300 jobs, and the RBA was a long way off where it wanted to be. 

Channel 7 Finance editor Gemma Acton said expectations for a rate cut had slipped, while economist Stephen Koukoulas predicted we had seen the last of RBA cuts. 

IFM economist Alex Joiner said further easing could still be expected later in 2020. 

Earlier in January, Moody's Analytics economist Katrina Ell said the potential $4.4 billion plus cost of this summer's devastating bushfires would increase the chance of a rate cut.

South Australia tops unemployment charts

South Australia held its unfortunate title of having the worst unemployment rate in the country, unchanged at 6.4% from November to December. 

Queensland also held its position, but fell 0.1% to 6.0% and was followed by Tasmania (5.8%) and Western Australia (5.6%). 

Victoria had an impressive 8,500 jobs added to its economy, while New South Wales and Queensland also added 5,000 and 4,100 jobs respectively. 

Over the past year, trend unemployment increased by around 261,000 (2.1%), which continued to be above the average annual growth over the past 20 years (2.0%). 

Full-time employment growth (1.5%) fell below the average annual growth over the past 20 years (1.6%) and part-time employment growth (3.2%) was above the average annual growth over the past 20 years (3.0%). 

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Alex joined in 2019. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.


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