Australia’s job market showed further signs of cooling in January, as the latest employment data reveals a modest increase of just 0.5k jobs, significantly below expectation of 20.7k growth. Looking at the details, full-time employment saw an uptick of 11.1k, counterbalanced by reduction in part-time job by -10.6k.

Unemployment rate unexpectedly rose from 3.9% to 4.1%, above expectation of 4.0%. That also marked the first occasion in two years since January 2022 that the rate has breached the 4% threshold. Participation rate held steady at 66.8%, but a notable decrease in monthly hours worked by -2.5% mom paints a picture of a slackening labor market.

Full Australia employment release here.

Australia NAB Business Confidence improved slightly form 0 to 1 in January. Despite this marginal improvement, Business Conditions dropped from 8 to 6, with notable decreases in trading conditions from 11 to 8, profitability conditions from 7 to 5, and employment conditions also falling from 7 to 5.

In terms of cost pressures, labour cost growth remained steady at 2.0% in quarterly equivalent terms, while purchase cost growth saw a slight increase to 1.8% from 1.7%. Product price growth experienced a pickup, moving to 1.2% in quarterly terms from 0.9%, reflecting a broader trend of easing price pressures. Specifically, retail price growth rose to 0.9% from 0.5%, and the growth rate for recreation & personal services prices increased to 1.2% from 0.9%.

NAB Chief Economist Alan Oster commented on the findings, stating, ” Capacity utilisation remains high, despite the slowing in growth over the second half of 2023, and price pressures are easing, with hopes they settle well below where they are now.”

Full Australia NAB monthly business survey release here.

Australia Westpac Consumer Sentiment Index surged by 6.2% mom to 86 in February, marking the highest level since June 2022. This increase also represents the largest monthly gain since April of the previous year, which conincided with a period when RBA temporarily halted its tightening cycle.

According to Westpac, the surge in consumer sentiment was notably propelled by improved sentiment towards major purchases, which climbed 11.3% to 86.8, and more optimistic outlook for the economy over the next year, rising 8.8% to 88.9—the highest since May 2022. Additionally, five-year economic outlook rose 4.4% to 93.

The cooling inflation and more favorable perspective on interest rates are believed to be the primary factors behind this uplift. However, despite the recent gains, consumer mood remains in the pessimistic territory.

A notable “sharp turnaround” in sentiment was observed following RBA’s decision in February to maintain the cash rate steady, with sentiment dropping from 94.1 to just 80 post-meeting. While the decision to keep rates unchanged aligned with general expectations, the decline in sentiment suggests consumers were anticipating a “clearer indication” that interest rates might begin to decrease.

Looking forward, Westpac anticipates the RBA will maintain the current interest rate in March, contingent on inflation continuing to align with expectations.

Full Australia Westpac consumer sentiment release here.