Australia's jobless rate fell to its lowest in four months in April but the number of people with full-time work declined - a mixed report that augurs poorly for a much-needed revival in wage growth and inflation. The unemployment rate slipped to 5.7 percent, the Australian Bureau of Statistics said on Thursday, compared with analysts' expectations for a steady 5.9 percent.
That and the 37,400-strong jump in jobs boosted the Australian dollar which rose a third of a US cent to a two-week high. It was last up 0.3 percent at $0.7451. "These figures further reduce any lingering chances of more rate cuts," said Paul Dales, chief economist at Capital Economics. "But the labour market won't prompt the RBA to hike rates for a long time yet."
The Reserve Bank of Australia (RBA) held interest rates at a record low 1.50 percent for a ninth straight month in May as it balances weak domestic demand and inflation against escalating household debt. It has repeatedly expressed worries about a "mixed" labour market. The minutes of its May policy meeting showed that board members had an in-depth discussion about employment, including the increasing share of part-time work.
Data out on Thursday showed all of the gains in jobs in April came from part-time employment which soared 49,000 while full-time work fell by 11,600. Total hours worked slipped 0.3 percent. Over the past year, the increase in part-time jobs at 111,300 has outpaced the rise in full-time employment of 80,700. That is one reason wages are growing at a record low rate, undermining domestic consumption.
However, the RBA is constrained by the fear of spurring a debt binge in Australia's red-hot property market if it lowered interest rates deeper into record territory. It has left rates unchanged since last easing in August 2016. Despite the weakness in April, the labour market is showing more signs of life with 101,000 full-time jobs added so far this year. While the number of part time has fallen marginally this year, despite April's rise.
Annual employment growth is running at 1.6 percent, and forward-looking indicators of employment such as job ads and business surveys have also been generally positive. Westpac economist Andrew Hanlan said further solid gains in emplyment growth were expected in the months ahead, but noted: "Considerable labour market slack persists, which will continue to weigh on wage and consumer inflation."
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