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‘Rule a line through’ August jobs numbers, says CBA

By Charbel Kadib
3 minute read

A spike in jobs numbers has been downplayed by economists who continue to expect a deterioration in labour market conditions over the medium term.

The seasonally adjusted unemployment rate remained steady at 3.7 per cent in August, according to the latest labour market print from the Australian Bureau of Statistics (ABS) – in line with market expectations.

This was despite 64,900 workers entering the jobs market in August, taking the total size of the labour force to just over 14.1 million.

Three of the big four banks (ANZ, NAB, and Westpac) had expected a modest fall to the unemployment rate following an increase in July, forecasting an unemployment rate of 3.6 per cent.


The Commonwealth Bank correctly anticipated no change to the headline figure.

“The large increase in employment in August came after a small drop in July, around the school holiday period,” Bjorn Jarvis, ABS head of labour statistics, observed.

“Looking over the past two months, the average employment growth was around 32,000 people per month, which is similar to the average growth over the past year.”

Reflecting on the figures, Dwyfor Evans, head of APAC macro strategy at State Street Global Markets, said the jobs boost reflects an increase in part-time employment, as indicated by the by 0.2 percentage point increase in the underemployment rate to 6.6 per cent.

“Headline indicators report a very strong employment report, but the bias towards predominantly part-time employment should temper exuberance,” he said.

CBA economists Craig James and Ryan Felsman went one step further, claiming observers could “rule a line through the August results”, given the short-term jobs boost from the FIFA Women’s World Cup and changing employer preferences.

“…They tell us nothing new,” the economists said.

“Certainly, the World Cup may have contributed to the strong part-time job growth in August, but employers may also be bracing for an economic slowdown, preferring to hire part-time rather than full-time workers.”

State Street’s Dwyfor Evans added that the record-high participation rate of 67 per cent (up from 66.9 per cent) may also moderate stunt wages growth.

“The most notable indicator is all-time highs on the participation rate and this indicates flexibility in the labour market that should moderate wage demands,” Mr Evans added.

This latest labour market print is not expected to alter the Reserve Bank of Australia’s (RBA) monetary policy strategy.

“There is little here to move the dial for the Reserve Bank, with the release of weaker consumer inflation expectations data for September a better indicator for policy inertia over coming months,” Mr Evans said.

Earlier this month, the RBA held the official cash rate at 4.1 per cent – marking the third consecutive pause following cumulative hikes of 400 bps since May 2022.

The stable unemployment rate in August is tipped to support expectations of a prolonged monetary policy pause, with some economists, including AMP Capital chief economist Shane Oliver forecasting cuts in 2024.

“While the risk in the short term is still on the upside for rates or a delay to the start of rate cuts, our base case is that rates will be on hold until early next year ahead of rate cuts starting in the March quarter,” he said.

“Rate cuts through next year should help growth to stabilise and pick up from late 2024.”

‘Rule a line through’ August jobs numbers, says CBA

A spike in jobs numbers has been downplayed by economists who continue to expect a deterioration in labour market conditions over the medium term.

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