The labour market report here was rather poor, with the jobless rate standing out as it jumped up to 4.5%. That is the highest estimate since 2021 and defies RBA governor Bullock’s description of the labour market being “a little bit tight”. The odds of a rate cut for November have now doubled to ~70%, up from just above 30% before the report.
The data today reaffirms that jobs growth is slowing in Australia – much like it is across the globe – and with unemployment also now above RBA forecasts, it’s a tall order for them to play that down at their next meeting decision. That as they will be questioned on the fact that higher unemployment tends to correlate with softer wage pressures in due time.
So, what’s next on the agenda to confirm the RBA’s next move?
Well, all eyes will be on the upcoming Q3 CPI report on 29 October. That will come just 6 days before the RBA’s next policy decision on 4 November. So, there is a bit of a wait in terms of getting a full picture of what the central bank should do next. But all else being equal, it’ll be hard to argue against another rate cut unless the inflation numbers come in really hot.
I mean, the RBA needed to find a reason to justify their next rate cut. And with the labour market numbers today, they definitely got that.
This article was written by Justin Low at investinglive.com.