Good news from down under today. Australian employment is on the mend, adding 17,400 jobs for the two months since July. Together with record-low interest rates and a falling currency, analysts are encouraged that the country might be in line for a policy easing sometime soon.
The jobless rate dropped to 6.2 percent with an increase of 11,500 full-time jobs and part-time employment rose by 5,900.
According to Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney, “The unemployment rate does seem stable in a 6 percent-to-6.25 percent range,”, said after the release.” He added that, “For a Reserve Bank that’s clearly reluctant to cut further, you’d have to get a weakening of the labor market” as one of the conditions before the central bank could consider easing policy again.
Underutilization Rate
The report also showed that the underutilization rate, or the number of people out of work plus those wanting to work extra hours as a proportion of the labor force, remained steady at 14.3 percent in August, after peaking at 14.8 percent in November 2014.
The drop in unemployment highlights the Reserve Bank’s view that the economy is producing a stable stream of jobs.
The Australian dollar traded at 69.94 U.S. cents at 12:16 p.m. in Sydney, up from 69.52 cents before the data was released. The central bank has already cut rates for key commodity exports twice since the beginning of the year and is looking to a lower currency in order to shift focus from mining which has seen a considerable drop of late to other industries.
Central bank Deputy Governor Philip Lowe is optimistic. According to him, Australia’s currency “has now adjusted considerably and this adjustment has continued over recent weeks. Just as the appreciation helped stabilize the economy in the upswing of the boom in commodity prices and mining investment, the depreciation is helping in the downswing.”