If inflation shows any sign of getting out of hand, you can book a rate rise before the end of the year into your diary or financial planning program.
Yesterday’s jobs figures for August from the Australian Bureau of Statistics were stunning: well over 50,000 full time jobs created, a net 30,900 of those remained after around 20,000 part time jobs were cut (probably converted to full-time gigs).
The figures are the first serious indicator for August and confirm that the pace of growth in the jobs market hasn’t slowed (or wasn’t slowed by the election campaign).
The unemployment rate fell to 5.1% last month, from 5.3%. Analysts had tipped a fall to 5.2%.
Since August 2009, around 280,000 new jobs have been created and since the peak in jobless numbers a bit earlier in 2009, the total is over 300,000.
The size of the labour force is now at an all time high and that would be concerning the Reserve Bank.
It won’t do anything at the October meeting because the September quarter jobless data won’t be released until late next month, a few days ahead of the November meeting on Melbourne Cup day.
Tuesday’s post board meeting statement from the RBA Governor, Glenn Stevens, did alter the wording to make it clear that the no rate rise policy was "appropriate for the time being".
If there’s no sign of any inflationary pressures in the September quarter CPI and especially the underlying measures of inflation, there won’t be a rate rise this year.
But if there is, then it really will be ‘rate rise looms’ for the headline writers ahead of the meeting on November 2.
Wednesday’s small rise in housing financial approvals would have added to the bank’s checklist of factors pushing towards a rate rise.
Solid retail sales and car registrations in the next month or two will add more pressure.
The ABS said that in the 12 months to August, the number of people in work rose 3.2% (which is just about the current growth rate in the economy of 3.3% in the year to June).
The number of people unemployed has fallen 9.5% and the unemployment rate has dropped from 5.8% in August of last year to 5.1% last month.
The ABS reported the number of people employed, increased by 30,900 to 11.272 million (seasonally adjusted) in August.
The rise in employment was driven by an increase in full-time employment, up 53,100 people to 7.920 million that was partially offset by a decrease in part-time employment, down 22,100 to 3.352 million.
The number of people unemployed fell 22,500 to 607,700 in August, reported the ABS.
The ABS seasonally adjusted monthly aggregate hours worked series showed a rise in August, up 14.8 million hours to 1,594.1 million hours, while the participation rate in August eased 0.1 of a percentage point to 65.4%.
The ABS said the labour force underutilisation rate increased 0.2 pts to 12.5%, with the male labour force underutilisation rate increased 0.2 pts to 10.7% and the female labour force underutilisation rate increased 0.3 percentage points to 14.7%.
