By Ambar Warrick
Investing.com-- The number of employed people in Australia grew more than expected in October, while unemployment fell slightly as tight labor conditions and improving wages kept demand for roles in the private sector upbeat.
Employed people in Australia grew 32,200 in October, more than twice as much as expectations of 15,000, data from the Australian Bureau of Statistics (ABS) showed on Thursday.
Australia’s unemployment rate also fell slightly to 3.4% from 3.5% in the prior month, while the participation rate remained steady at 66.5% of the population.
The readings, coupled with a bigger-than-expected rise in wages in the third quarter, indicate that Australia’s labor market has remained steady despite headwinds from factors such as rising inflation and interest rates.
Australian wages grew at their fastest pace in seven years in the third quarter, helped largely by increased salaries in the private sector.
The country is facing a shortage of skilled laborers, which is pushing employers into offering higher wages to retain talent. Still, members of the ABS noted that growth in employment appeared to be slowing, which could indicate some cooling in the labor market after a strong run this year.
Strength in the labor market gives the Reserve Bank more economic headroom to keep raising interest rates. The central bank recently raised interest rates by a relatively smaller margin, but signaled that it intends to keep raising rates to combat rising inflation, which hit a 32-year high in the third quarter.
The Australian dollar was largely unchanged after the reading, with analysts stating that it appeared unlikely that Thursday’s data would largely affect the Reserve Bank’s rate hike decisions.
“We do not believe this data substantially affects the Reserve Bank’s rate policy decisions. We expect them to continue hiking at a 25bp pace, with rates to peak early next year at 3.6%,” analysts at ING wrote in a note.