Australia employment rose less than expected in September, following a blowout result the month before, but the jobless rate still ticked down in a sign the labour market remained drum tight.
The report alone did not move market pricing for an interest rate hike from the Reserve Bank of Australia next month, but it does raise the stake for the third-quarter inflation report due next Wednesday, which will now break or make the case for a hike.
Figures from the Australian Bureau of Statistics on Thursday showed net employment rose 6,700 in September from August, when they surged 63,300. Market forecasts had been for an increase of around 20,000.
The jobless rate dipped to 3.6%, under forecasts for a steady 3.7%, partly due to a pullback in the participation rate to 66.7%, from a record high of 67%, as fewer people were looking for work.
The Australian dollar slipped as much as 10 ticks to $0.6314 before steadying at $0.6320, while markets continued to price in an about 25% chance of a quarter-point rise in the cash rate to 4.35% next month.
The labour market has proved remarkably resilient with 394,300 net jobs added in the 12 months to September even as interest rates have climbed 400 basis points to a decade-high of 4.1%.
However, the RBA judged the labour market has reached a turning point. The job gains for September were driven by a 46,500 jump in part-time jobs, which more than offset a 39,900 decline in full-time employment, while hours worked fell 0.4% in September, after a drop of 0.5% in the previous month.
"The soft headline employment print, the fall in full-time employment and hours worked and the decline in labour force participation point to a cooling labour market," said Adam Boyton, head of Australian Economics, at ANZ.
"For the RBA we'd see this as a result broadly in line with expectations. That puts the focus squarely on the CPI next week ahead of what looks to be a live RBA Board meeting in November.
The recent messaging from the RBA has been on the hawkish side. Michele Bullock, the new RBA governor, on Wednesday warned there were signs that inflation in the country might be difficult to suppress, and policymakers will have to raise rates again if inflation remains higher than expected.
The RBA currently forecasts inflation, which was running at 6% in the second quarter, to return to the bank's 2-3% target in late 2025.
