The US Federal Reserve took its rate-cutting lead from a cooling American jobs market, but on Thursday, there was no such guidance for the still inflation-nervous Reserve Bank, which faced a strong jobs report for August.
The US and Australia share a similar jobless rate of 4.2%. While the Fed and its chair, Jay Powell, have made it clear that the cooling labour market contributed to the half-percentage-point cut in the Federal Funds Rate on Wednesday, the local labour market is still experiencing strong jobs growth—despite a decline in full-time employment and a surge in part-time work in August.
This shift is usually a warning sign that job creation is slowing, as more employers adjust their expectations about the outlook for their businesses, slowing hiring or pushing staff onto part-time roles.
Offsetting these concerns, however, was a solid rise in hours worked—which should have been smaller or perhaps even fallen, given the jump in part-time employment.
The Australian Bureau of Statistics (ABS) reported on Thursday that total employment grew by 47,000 in August, well above market forecasts of around 30,000.
Additionally, the number of unemployed people dropped by 10,000 (though this could be a negative if discouraged workers are leaving the workforce). However, the number of unemployed remains up by 45,000 compared to the end of 2023.
Kate Lamb, head of labour statistics at the ABS, said: “The number of unemployed people fell by around 10,000, while the number of employed people grew by around 47,000 in August. This resulted in the unemployment rate remaining steady at 4.2 per cent, with the participation rate staying at its record high of 67.1 per cent.”
Full-time employment fell by 3,100, following a sharp rise of around 65,000 in July. Meanwhile, part-time jobs surged by more than 50,000, after a near 16,000 decline in July.
“The growth in employment increased the employment-to-population ratio by 0.1 percentage point to 64.3 per cent, just below the historical high of 64.4 per cent in November 2023.
“This rise in the employment-to-population ratio was driven by an increase for men, which rose by 0.2 per cent to 68.1 per cent, while the ratio remained at a near-record high of 60.6 per cent for women.
“The high employment-to-population ratio and participation rate show that large numbers of people are still entering the labour force and finding work, as employers continue to fill an unusually high number of job vacancies.”
A key indicator of the strength of the jobs market—hours worked—again rose slightly faster than the growth in employment for the second consecutive month.
The ABS noted that seasonally adjusted monthly hours worked increased by 0.4%, slightly outpacing the 0.3% rise in employment.
An additional indicator was also highlighted by the ABS: “The proportion of people working reduced hours due to illness remains above pre-pandemic levels. However, the proportion of people working fewer hours than usual for economic reasons, such as no work or less work available, is below pre-pandemic levels. This points to continued relative tightness in the labour market,” Ms Lamb said.