Headline: Westpac: October Jobs Bounce Keeps RBA Locked on Inflation
Introduction: A stronger-than-expected Australian jobs report for October has eased concerns raised by September’s weak print. Westpac says the rebound allows the Reserve Bank of Australia to focus squarely on inflation dynamics, rather than short-term volatility in employment data.
Westpac’s economists argue that the latest labour force numbers largely offset September’s softness, leaving the broader trend unchanged: a labour market that is gradually loosening, not collapsing. That characterization aligns with the RBA’s recent messaging that the data include both “signal” and “noise,” and that policy should be guided by the underlying trajectory rather than one-off swings.
With unemployment edging down to 4.3% versus expectations of 4.4% (from 4.5% prior), the report does not suggest renewed wage or price pressure, but neither does it indicate a sharp deterioration that would force a policy pivot. As a result, Westpac expects the central bank to keep its attention on the inflation outlook and the sequence of upcoming CPI prints to judge whether underlying inflation is moving convincingly toward the target band.
Markets reacted swiftly to the stronger jobs outcome: the Australian dollar firmed while local equities slipped as rate-cut hopes were pared back. The prevailing view is that the RBA stays on hold in the near term, with monetary policy finely balanced between taming persistent inflation and managing a cooling, but still resilient, labour market.
Key Points: – October’s jobs rebound offsets September weakness, supporting a stable policy stance. – Westpac sees a gradual loosening in labour conditions, not a shift in momentum. – RBA likely to prioritize inflation data and upcoming CPI readings over employment volatility. – Unemployment rate fell to 4.3% (vs 4.4% expected; 4.5% prior). – Market response: Australian dollar strengthened; rate-cut expectations eased. – Baseline outlook: RBA on hold while assessing progress toward the inflation target.
