- Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada
The Australian economy created more jobs in August than analysts had expected, adding to signs all-time low interest rates, a weaker Australian Dollar as well as sluggish wage growth is encouraging employers to hire. As the result, Australia's unemployment rate dropped to 6.2% in August, down from 6.3% in the prior month, as the number of people employed rose more than 17,000. In contrast, analysts had anticipated to see a net 5,000 jobs added to the economy in the reported month. At the same time, participation in the labour market eased to 65.0% in August from a near one-year high of 65.1% in July. The Reserve Bank of Australia believes that unemployment has already peaked. However, if the jobless rate were to begin rising again, it is likely that the central bank will ease policy further. Currently the market is pricing in one more 25 basis point cut before the end of the year, but the RBA has been refraining from adding more stimulus since May when it last cut the cash rate, to a record-low 2.0%.
Meanwhile, data released by the ABS last week showed the Australian economy grew a mere 0.2% in the second quarter, down from a 0.9% expansion in the three months through March.
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