Australia’s labour market is showing signs of resilience, remaining tighter than the Reserve Bank of Australia (RBA) had anticipated. According to Global X’s senior product and investment strategist Marc Jocum, the latest labour force report indicates a cooling from December, but not a significant loss of momentum. Despite some fluctuations, the overall labour market remains robust, with companies still facing challenges in finding suitable workers. Unit labour cost growth remains elevated, and wage growth is stable, pointing to continued tightness in the job market. Global X ETFs provides investors with access to a broad suite of solutions. The firm is recognised as a leader in thematic and rules-based investment strategies.
Jocum noted that the current labour market conditions are not aligning with the RBA’s intended path. RBA Governor Michele Bullock has stated that unemployment is expected to gradually increase to 4.3 per cent this year and further to around 4.6 per cent by 2028. This projected increase in unemployment is part of the RBA’s plan to introduce some slack into the labour market. However, the steady unemployment rate suggests that the market may be deviating from this intended trajectory.
This divergence from the RBA’s plan could potentially reinforce the case for further tightening measures. With the labour market remaining tight and inflation still at elevated levels, the RBA faces a complex balancing act. The central bank must carefully manage the dual objectives of cooling the labour market and preventing inflationary pressures from re-emerging. Jocum said that employment figures remaining tight, with inflation uncomfortably high, may strengthen the case for the tightening cycle to continue.
