Australia’s economic landscape is no ordinary rubik’s cube. On an up-and-down day overall, the AUD was stable at 0.6662. The Aussie against the US dollar currency pair was now down 0.26% on the day. Yet this drop reflects the extreme hurdles that persist in the current market. Last week Australian Bureau of Statistics released new employment figures. These figures revealed tremendous promise and progress, as well as lagged sectors, both resulting in analysts throwing up the cautionary flag on the nation’s economic forecast.
According to recent data in the last 24 hours, the AUD has fallen 0.98% against the USD. It declined 0.69% against the Euro and 0.70% against the British Pound. Perhaps even more remarkably, it’s down even further 1.26% in comparison to the Japanese Yen (JPY). The Australian Dollar has been able to take some value from the CAD, gaining +0.17%. It gained 0.25% against the New Zealand Dollar (NZD) and 0.94% against the Swiss Franc (CHF). These ups and downs magnify a still-churning trading landscape whose ongoing effects are still being felt on local and global markets.
Employment Figures Show Mixed Results
In November, Australia’s unemployment rate was stable at 4.3%. Though this figure is as expected, it begs critical questions about the employment trends beneath the surface. The employment-to-population ratio decreased by 0.2 percentage points to 63.8%, reflecting a decrease in the share of the population that is actively engaged in the labor force.
Full-time employment figures indicated an even worse picture, with full-time jobs decreasing sharply by 57,000 people over that same stretch. This alarming shift from full-time to insecure work is a source of worry and anxiety about future financial security for too many Australians. Employment in part-time work climbed by 35,200 jobs. This change is a sign that even more Americans are looking for flexibility in their work, especially amid continued economic uncertainty.
In the release, the number of unemployed people fell by 2,000 in November. Yet, the overall employment level dropped by 21,000. The increase in part-time jobs, as full-time jobs are disappearing, creates a dilemma. This trend might be a sign of profound structural changes in Australia’s labor market.
Economic Implications of Currency Fluctuations
The recent movement in the AUD’s value is a harbinger of what you can expect in store for Australian businesses and consumers – time to pay attention! A weaker dollar tends to make imports more expensive, and thus increases overall inflation, further raising costs on households. A depreciation of the exchange rate would further enhance these export opportunities. This increases Australian goods’ competitiveness in international markets.
Such currency movements might make some monetary policy actions easier or harder for the RBA – the Reserve Bank of Australia – to take. Further, inflationary pressures are building as record import costs are passed along to American consumers. To ensure continued economic stability, the RBA will have to start increasing interest rates. Analysts have been watching these trends with a keen eye to see how they will play out on bottom-line economic growth in the months ahead.
Looking Ahead
Australia grapples with uncertainty on the employment front and a volatile currency. Private and public sector leaders will need to be vigilant to meet the next great challenge. Despite the comforting news from a stable unemployment rate, there are still worries about full-time jobs and increases in salaries.