Australian Jobs Data Makes Rate Cuts Harder to Justify

Australia's latest labour market data has complicated the interest rate outlook in a way equity investors cannot afford to ignore. Employment surged by 76,300 in June while the unemployment rate held steady at 4.4%, reinforcing the view that the labour market remains tighter than the Reserve Bank would like while inflation is still proving sticky.

That is encouraging for economic resilience. It is less encouraging for borrowers, rate sensitive sectors and investors hoping for a smooth path towards lower funding costs.

Strong employment supports household incomes, but it also gives the Reserve Bank less room to ease. . .