And the numbers are in! How did Australia’s employment industry fare in December and what could this mean for the Aussie’s forex price action moving forward? Here’s what you need to know about the latest jobs report:
1. Australia added 37.4K jobs vs. 5.3K estimate
Surprise, surprise! When most analysts were expecting to see a downturn in hiring, the Land Down Under printed an impressive 37.4K increase for December and even indicated an upgrade from 42.7K to 45.0K for its November employment change reading. This marks the third consecutive month that Australia has seen stronger than expected jobs figures.
And before y’all chalk this up as merely a result of part-time hiring, let me tell you that full-time employment actually picked up by 41.6K while part-time jobs fell by 4.1K in December. Ha!
2. Jobless rate improved to 6.1%
Thanks to the positive hiring streak since October, Australia managed to bring its jobless rate down from 6.2% to 6.1% by the end of 2014. A closer look at the components of the report indicates that the participation rate improved from 64.7% to 64.8% last December, indicating that more Australians returned to the labor force to look for work.
3. Economic experts aren’t impressed
Looks like the latest jobs release wasn’t enough for some analysts to ditch their rate cut expectations. In fact, ANZ still expects the RBA to reduce their benchmark rate from 2.50% to 2.00% by the middle of the year.
“ANZ Research expects some further deterioration in the unemployment rate over 2015 to a peak of 6.6 percent in Q2, in response to softer domestic growth outcomes and expectations,” the firm noted. “While indicators of new labor demand have been increasing moderately, this is unlikely to be strong enough to counteract the flow of new workers into the economy and job losses in certain sectors. Today’s figures should be characterized as a pause on the gradual uptrend.”
For now, Aussie bulls still seem to be partying after the release of stronger than expected jobs data, but it remains to be seen whether the forex rallies can be sustained or not. After all, yesterday’s news about the slump in copper prices led to speculations of a potential downturn in the industry, which might then weigh on hiring later on. Do you think this is a likely scenario?