The financial sector is signalling an eighth straight rate rise is likely next month, after unemployment fell back to a 48-year low of 3.4 per cent.
The number of workers rose by 32,000 in the month, twice the anticipated figure, according to the Australian Bureau of Statistics.
With unemployment at the lowest since 1974, CBA head of Australian economics Gareth Aird said this “rubber stamped” a hike in December.
“The message from the labour force survey has been remarkably consistent over the past five months – the unemployment rate has essentially hit a floor and the labour market is very tight,” Aird said.
The logo of the Commonwealth Bank of Australia Ltd. (CBA) is displayed outside a bank branch in Sydney on Friday, April 8, 2011. The Australian dollar hit a new post-float high of 105.08 US cents, after the Australian March unemployment rate fell to 4.9 percent. (AAP Image/Sergio Dionisio) NO ARCHIVING
“As a result, wages growth has finally accelerated in a meaningful way. The challenge now for the RBA is to cool demand in the economy such that the labour market loosens a little, but not too much.”
AMP Capital chief economist Shane Oliver said, “while the jobs market is showing some signs of cooling, the strength in jobs in October and the further fall in labour under-utilisation, which points to a further acceleration in wages growth, makes it hard to see the RBA pausing next month.”
A single rise will take the rate to 3.1 per cent. The next RBA meeting takes place on December 6.
