By Ambar Warrick
Investing.com-- Australia created a much lower-than-expected number of jobs in September, while unemployment remained steady as elevated inflation, sluggish wage growth and higher interest rates appeared to be cooling a jobs boom seen earlier this year.
The country added only 900 new jobs in September, well below expectations for growth of 25,000 jobs and last month’s reading of 33,500 jobs, data from the Australian Bureau of Statistics showed on Thursday.
The reading was largely due to a big fall in part-time employment, while full-time roles grew by over 13,000. Still, analysts at ING said the data was “not a strong set of numbers.”
While the participation rate, i.e. the percentage of the population that is either working or looking for work, remained steady at 66.6%, the employment-to-population ratio fell to 64.2%.
The unemployment rate also remained steady at around 48-year lows of 3.5%.
The data shows that despite an abundance of vacancies in the country, worsening economic conditions appear to be weighing on the jobs market. Wage growth, for instance, has largely lagged behind inflation this year.
The Australian dollar reacted negatively to the data, falling 0.2% to $0.6259. Jitters over rising U.S. Treasury yields also weighed on the currency.
The weaker-than-expected data builds the case for the cautious stance adopted by the Reserve Bank of Australia (RBA) during its recent meeting. The central bank raised interest rates by a lower-than-expected 25 basis points, citing caution over economic damage caused by raising rates too quickly, too soon.
Still, the central bank flagged more interest rate hikes, as it moves to combat inflation reaching an over 20-year high.
But rising interest rates have severely dented Australian consumer sentiment this year, particularly towards the housing market, as mortgage prices increased.
Consumer spending is the biggest driver of economic growth in Australia this year after the country withdrew most COVID-related restrictions. But a slowdown in the jobs market, coupled with rising interest rates, threatens to damage this trend.