SYDNEY Australian employment blew past forecasts for a third straight month in August, yet the jobless rate held steady as the workforce also expanded at a rapid rate, reinforcing the view that the labour market remains tight.

The report supports the Reserve Bank of Australia's assessment that interest rate cuts are some months off. Bond futures extended earlier drops, with three-years down 11 ticks to 96.53.

The Australian dollar pared earlier losses to be up 0.1% to US$0.6771.

Net employment jumped by 47,500 in August from July, according to the Australian Bureau of Statistics. That was well above market forecasts for a 25,000 rise, though all the gains were in part-time employment.

Revised figures for July showed a climb of 48,900, although that was down from an earlier figure of 58,200.

The jobless rate held at 4.2%, as expected, while the participation rate was steady at an all-time high of 67.1%, Hours worked rose a robust 0.4%.

"The proportion of people working less hours than usual due to economic reasons, such as no work or less work available, is below pre-pandemic levels, which points to continued relative tightness in the labour market," said Kate Lamb, ABS head of labour statistics.

The Reserve Bank of Australia has held its policy steady since November, judging the current cash rate of 4.35% - up from 0.1% during the pandemic - is sufficiently restrictive to bring inflation to its target band of 2%-3% while preserving employment gains.

The bank has been somewhat surprised by the strength in recent data such as hours worked and underemployment, a reason that underlying inflation - which ran at 3.9% last quarter, is only expected to return to target by the end of next year.

Markets still see a 75% chance of a rate cut by the year end.

  - Reuters