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Australia employment jumps again, matches record streak
[SYDNEY] Australian employment jumped past expectations in December to match the longest run of monthly gains on record, yet unemployment still edged up as more people looked for work, putting a drag on wages and inflation.
Thursday's figures from the Australian Bureau of Statistics showed 34,700 net new jobs were added in December, handily beating forecasts for a 9,000 rise and a big surprise given it came on top of November's huge 63,600 surge.
That was the 15th straight month of gains, the longest such streak since 1993.
The detail was upbeat with full-time jobs rising 15,100, bringing the increase for all of 2017 to a blistering 303,100. Total jobs growth for the year was a rapid 3.3 percent.
However, the unemployment rate still edged up to 5.5 per cent, from 5.4 per cent, as more people went looking for work. The participation rate climbed to its highest since January 2011 at 65.7 per cent as more women entered the workforce.
With labour supply expanding to more than meet demand, it meant there was less upward pressure on wages and inflation and thus no near-term trigger for a rise in interest rates from the Reserve Bank of Australia (RBA).
That outlook was reflected in the local dollar which eased a quarter of a cent to US$0.7945 on the data.
The local currency has been rallying recently amid a run of upbeat domestic data and general weakness in the US dollar, hitting a four-month peak of US$0.8023 overnight.
Interest rate futures also showed no change in the odds of a rate rise, with a move by August seen as a 50-50 shot. A hike is still not fully priced in until December.
Leading indicators of labour demand do point to further gains ahead. The government's well-regarded measure of job vacancies climbed to a record in the three months to November, notching a sixth straight quarter of solid gains.
It was the highest reading since the series began in 1979 and left vacancies up 16 per cent on a year earlier.
WHERE'S THE WAGES?
Yet while firms are snapping up workers, they are not so keen on paying them more, leaving wage growth near record lows in an unwelcome drag on consumer spending and inflation.
The scrooge-like pace of pay rises is a major reason the RBA believes core inflation will not reach the floor of its 2 to 3 per cent target band until early 2019, thus arguing against a rate hike anytime soon.
Policy makers have been hoping wages would have to turn higher as the jobs market tightened, but recent data on collective pay deals suggest the opposite.
The latest batch of enterprise bargaining agreements, which in total cover around 36 per cent of employees, showed average wage growth slowing sharply to a record-low 2.2 per cent.
"The continued decline suggests that expectations on wages are still too optimistic," said UBS economist George Tharenou.
"This reinforces our long-held view that the future rise in wages/CPI will disappoint the hawks despite booming jobs. That's key to our call for no RBA rate hike until the first half of 2019."