The July unemployment rate fell to the lowest level since 2012 to 5.3% with full-time jobs added by 24,300 while part-time jobs fell by 20,700. Meanwhile, the participation rate softened slightly to 65.5% in July compared to 65.6% in June.

The data shows not much has changed, suggesting job growth is still healthy enough to allow the unemployment rate to continue edging lower. We feel the labour market is not strong enough to fuel a decent rise in wage growth and inflation for now though we foresee a modest pick-up in domestic demand. With inflation muted across the economy, we reiterate our view that the Reserve Bank of Australia will hold rates unchanged until 1H2019.

• The July unemployment rate fell to the lowest level since 2012. The unemployment rate was at 5.3% from 5.4% in June. The total number of full-time jobs added in July was 24,300 while part-time jobs fell by 20,700. Meanwhile, the participation rate softened slightly to 65.5% in July compared to 65.6% in June.

• Looking at the data, we found not much has changed. The unemployment rate has declined at a gradual pace by 0.2% YTD. It implies jobs growth is still healthy enough to allow the unemployment rate to continue edging lower.

• We feel the labour market is not strong enough to fuel a decent rise in wage growth and inflation for now though we foresee a modest pick-up in domestic demand. With inflation muted across the economy, we reiterate our view that the Reserve Bank of Australia will keep rates unchanged until 1H2019.

Source: AmInvest Research - 17 Aug 2018