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The Australian Bureau of Statistics released its regular monthly report, reflecting on the change in employment conditions in the country for the past period. The latest report demonstrated upsurges in both full-time and part-time employment for the previous month of June, as the total employment increased with 26300 persons.
Despite the additional 4700 persons that had been added to the total of 701 700 unemployed persons, the underlying unemployment rate has remained steady at 5.2 per cent.
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Evidently, the Australian labour market has displayed resilience to external detrimental factors in the past three months, and the national economy is continuing to work at close to full employment at a sustainable rate.
The Reserve Bank of Australia had previously expressed concerns over tight international trade and subdued prospects for economic growth until the end of the year, owing to the global protectionist policies of the US and China. The bank has been especially concerned with the possibility of lessened foreign investment from Chinese businesses because of muddled economic activity in China, which could, in turn, hamper investments into the Australian labour market.
“[…] the uncertainty generated by the trade and technology disputes is affecting investment and means that the risks to the global economy are tilted to the downside. […] The slowdown in global trade has contributed to slower growth in Asia. […] The persistent downside risks to the global economy combined with subdued inflation have led to expectations of easing of monetary policy by the major central banks.” [source]
Conversely, the RBA is likely to consider the recent labour data-findings as being exemplary of the exhibited resilience of the Australian economy to the mounting such foreign downside risks to economic growth. However, despite the encouraging labour numbers, there is still room for improvement.
In its last post-interest rate decision statement, the Board of Directors of the RBA also had this to say in regards to the Australian labour market:
“There has been little inroad into the spare capacity in the labour market recently, with the unemployment rate having risen slightly to 5.2 per cent. […] these labour market outcomes suggest that the Australian economy can sustain lower rates of unemployment and underemployment.”
Overall, the softer labour data from Thursday, in terms of the manifested spare capacity for further growth, could give reasons to the Board of Directors of the RBA to consider further softening of the interest rate in order to stimulate the future expansion of the labour market.
The Australian dollar appreciated with 0.94 per cent against the greenback by the end of Thursday’s daily trading session, driven by the upbeat employment numbers. With this recent performance, the previous major resistance level at 0.70117 has now turned into a strong support level, which gives investors additional reasons to expect the AUDUSD pair to continue extending its gains in the near-term.
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