Australia’s unemployment rate has decreased to 4.3 per cent in October, according to BDO chief economist Anders Magnusson. He suggests this drop indicates that the previous month’s increase was likely a statistical anomaly rather than the beginning of a downward trend in the labour market. Magnusson stated, “The October result reflects strong job creation and reducing unemployment in a healthy labour market.”
The Reserve Bank of Australia (RBA) had projected unemployment to stabilise around 4.4 per cent through the end of the following year, a slight upward revision from their previous forecast of 4.3 per cent. The latest unemployment figures appear to align with this revised outlook. However, Magnusson believes that inflation data will be the primary focus of the RBA’s discussions in their upcoming December meeting.
Magnusson highlighted the significance of the September quarter Consumer Price Index (CPI) and the new monthly CPI inflation data, noting that this new monthly data will provide the RBA with the most comprehensive inflation series it has ever had. He expects the RBA to maintain the current cash rate in December, unless the monthly CPI data reveals a more pronounced decline in underlying inflation than the quarterly data has shown thus far.
In summary, while the decrease in unemployment is a positive sign for the Australian economy, the RBA’s monetary policy decisions will likely hinge on the evolving inflation landscape. The central bank will carefully analyse the latest CPI figures to determine whether further intervention is necessary to manage inflation effectively.
