Australia’s unemployment rate rose to 4.2% in July, compared with expectations and the previous figure of 4.1%, according to official data released by the Australian Bureau of Statistics (ABS) on Thursday.
Additionally, the Australian employment change rose to 58,200 in July from 50,200 in June, compared with the consensus forecast of 20,000.
Australia’s participation rate rose to 67.1% in July, compared with 66.9% in June. Meanwhile, full-time employment rose by 60,500 in the same period from 43,300 in the previous reading. Part-time employment fell by 2,300 in July from 6,800 previously.
AUD/USD reaction to Australian jobs report
The Australian Dollar is up in an immediate reaction to the mixed Australian employment report. The AUD/USD pair is trading at 0.6595, down 0.06% on the day.
Employment FAQs
Labour market conditions are a key element in assessing the health of an economy and therefore a key factor in currency valuation. A high level of employment, or a low level of unemployment, has positive implications for consumer spending and therefore economic growth, which boosts the value of the local currency. On the other hand, a very tight labour market – a situation where there is a shortage of workers to fill vacant positions – can also have implications for inflation levels and therefore for monetary policy, as a low labour supply and high demand leads to higher wages.
The pace at which wages grow in an economy is key for policymakers. High wage growth means that households have more money to spend, which often translates into higher prices for consumer goods. Unlike other, more volatile sources of inflation, such as energy prices, wage growth is seen as a key component of underlying and persistent inflation, as wage increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding their monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks have mandates explicitly related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank (ECB) has only one mandate: to keep inflation under control. Still, and regardless of their mandates, labor market conditions are an important factor for policymakers given their importance as an indicator of the health of the economy and their direct relationship with inflation.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
