The Australian labor market recovered in August as jobs grew by 44K versus expectations of only 18K jobs following the loss of 4.4K jobs in July. At the same time, the level of participation of the labor force rose, leaving the unemployment rate unchanged at the lowest level in 6 years at 5.3%.
The index, which sum the unemployment and underemployment, which provides a better view of the health of the labor market, fell to 13.4 percent, the lowest since June 2013.
The Reserve Bank of Australia kept interest rates at record low levels to boost investment and employment to such an extent that employers are forced to pay higher wages. The central bank is struggling for new inflationary incentives as the government tries to cut energy prices, leaving wages the best option to stimulate consumer prices and pave the way for its first interest rate hike since 2010.
Australia's economy grew to a 6-year high in the second quarter, and policymakers hope that the at 1.5 percent interest rate will remain driving the rapid expansion, boosting the labor market and helping to boost inflation. On the other hand, Australia's political uncertainty has hurt business confidence as the country has seen its sixth change of prime minister since 2007.
