(Bloomberg) -- Australian employment growth easily outpaced expectations in November, sending the local currency higher and underscoring the Reserve Bank’s recent concern about the persistent strength of domestic demand. 

The economy added 61,500 roles, more than five times the 11,500 forecast, government data showed Thursday. At the same time, unemployment climbed to 3.9%, the highest level since May 2022, as the participation rate jumped to a record 67.2% in November.

“Australia’s jobs market overall remains resilient,” said Callam Pickering, APAC economist at global job site Indeed Inc. “There are a lot of jobs available to be filled, with skill and talent shortages still common across most industries. This will support employment growth in the near-term but may not be sufficient to stop the unemployment rate from rising, as we’ve seen recently.”

The Australian dollar briefly broke above 67 US cents before trading at 66.92 cents at 12:28 pm in Sydney while yields on the policy-sensitive three-year bond also gained.

The figures underscored the economy’s surprising ability to absorb the RBA’s 4.25 percentage points of interest-rate hikes since May 2022. Yet they jar with a business survey earlier this week that showed confidence plunged to an 11-year low with forward indicators also softening. 

Governor Michele Bullock reckons the labor market is now “not as tight as it was,” noting that some leading indicators such as job vacancies have begun to ease from high levels. Against that backdrop, today’s data is likely to surprise the RBA and encourage it to maintain a tightening bias.

Still, annual jobs growth edged down to 3.2% from 3.6% at the start of the year. Economists expect the pace of gains to slow with the jobless rate seen climbing to 4.25% next year. 

“Overall growth rates in employment and hours worked are now similar over the past 18 months,” said Bjorn Jarvis, ABS head of labor statistics. “The narrowing gap between these two growth rates suggests that the labor market is now less tight than it has been.”

Bullock delivered her first rate increase as governor last month, hiking to a 12-year high of 4.35% and ending four straight pauses. She left rates unchanged last week with money market bets implying the central bank is now done hiking and an easing cycle is likely to begin around mid-2024. 

The RBA’s monetary policy board next meets on Feb. 5-6.

Today’s labor data also showed:

  • Underemployment rose to 6.5% and underutilization to 10.4%
  • Full-time roles jumped by 57,000, while part-time jobs gained 4,500
  • The employment to population ratio increased to 64.6%

(Updates markets, adds economist’s comment, chart.)

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