Australia's labor force data for September came in weaker than expected and reduces the likelihood of another interest rate hike in November, ANZ said in a Thursday report.
Same-day data from the Australian Bureau of Statistics showed Australia's seasonally adjusted unemployment rate rising by 10 basis points from the previous month to 4.7% in September, with the number of employed Australians falling by 39,300 and the volume of unemployed people increasing by 8,900.
However, the Reserve Bank of Australia's (RBA) messaging in the minutes of its September meeting suggests the central bank might be more tolerant of a higher unemployment rate as it fights rising inflation, ANZ said.
The bank specifically pointed to the RBA's statement that returning inflation to target in an environment of more persistent adverse supply shocks could require "accepting slower growth in demand and employment than would otherwise be the case."
While a November rate hike is now less likely than it was earlier, ANZ continues to expect an increase of 25 basis points at the upcoming meeting.
The monetary policy decision will ultimately depend on how the central bank's board assesses both the activity and inflation sides of the economy. Concerns over domestic capacity pressures and a rise in energy prices since August point to upside risks to the inflation outlook, ANZ said.
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