The Conundrum of Job Market Strength for the RBA: How Can They Balance Inflation and Employment?
Jobs Strength Becoming a Catch-22 for the RBA
The latest payroll data from the Australian Bureau of Statistics reveals that job growth had a solid start in February, indicating that the labor force data for the same month could meet optimistic expectations. The jobless rate is expected to dip to 3.6% from 3.7% in January, with most forecasts suggesting between 40,000 to 70,000 new jobs could be reported by ABS today for last month.
AMP Chief Economist Shane Oliver believes that employment will rebound by 70,000 following the seasonal distortions in December and January that saw more people than normal indicating they had a job to go to. However, there will be some give-back due to the weak January figures and the loss of jobs while tens of thousands of people had jobs but were waiting to start them.
Payroll Data Supports the Idea of a Pool of People with Employment Deals
The ABS payroll data for the late January and early February period supports the idea of a pool of people with employment deals who had not started work. The data shows more people in education and construction returned from summer breaks to take up new jobs, suggesting that there could be some support for the idea of a pool of people waiting to start their employment in January.
The Consistent Growth in Payroll Jobs
The ABS payroll data reveals impressive growth in payroll jobs in 2023, rising 2.6% to 3.1% higher than in 2022. The rise in payroll jobs in mid-February 2023 is a seasonal pattern seen before. Mr. Bjorn Jarvis, the head of labor statistics in ABS, noted that the consistent growth in payroll jobs may be attributed to the Single Touch Payroll data, now available for the past four years.
Payroll Jobs Rose in All States and Territories
According to ABS data, payroll jobs rose in all states and territories from mid-February 2023, with the largest increase in the Northern Territory and Victoria. The increased payroll jobs in New South Wales and Victoria accounted for 59.3% of the national increase in this period.
- ABS data showed that job growth was widespread across the economy, with payroll jobs rising in 17 industries.
- The participation rate is also expected to grow due to workers’ return from summer holidays.
- The strong job numbers show that the employment market is tightening, making it a Catch-22 situation for the Reserve Bank of Australia.
The strong payroll data reveals an optimistic employment market in Australia that could lead to a strong economic rebound. However, the rise in job numbers could create a Catch-22 situation for the Reserve Bank of Australia, which is navigating the delicate balance of managing inflation and growth in the wake of the pandemic.
While the payroll data is positive news for the Australian economy, it remains to be seen whether this trend continues. With the Reserve Bank of Australia caught in a Catch-22 situation, balancing economic growth and the tight employment market will be challenging.