GBP/AUD: Aussie Tumbles After Disappointing Employment Data from Australia

GBP/AUD is surging in early trade on Thursday after surprisingly weak employment data from Australia and a series of disappointing economic data from China.

Currently, one British pound buys 1.8872 Australian dollars, up 0.44% as of 5:48 AM UTC. Since last Thursday, the pair has recovered the greatest part of losses caused by a long-lasting bearish trend.

Australia’s Unemployment Increases

The unemployment rate in Australia increased. The economy cut jobs for the first time in nearly one and a half years. The disappointing data adds to the pressure on the central bank to reduce its interest rate.

The Australian Bureau of Statistics (ABS) said that the unemployment rate rose last month to 5.3% from 5.2%. Economists expected no change. Also, net new jobs dropped 19,000 on the month, which is the largest decline since 2016. Analysts surveyed by Reuters anticipated a gain of 15,000.

The Reserve Bank of Australia (RBA) said in its previous outlook reports that the jobless rate will keep at 5.2% through next year. Thus, the latest decline will force it to ponder another rate cut. The central bank has already slashed rates three times this year, to a record low of 0.75%. However, the stimulus had an effect on home price inflation only so far.

Economists see a 24% probability of a 0.25% cut at the RBA’s next meeting in December. They also see a 62% chance for a rate cut in February.

Callam Pickering, an economist at Indeed and a former RBA executive, commented:

“Australia’s latest labor force figures make another rate cut a certainty. To kick-start the economy we will need greater stimulus. Much more needs to be done, whether it be through further rate cuts, unconventional monetary policy or, in an ideal world, fiscal stimulus.”

The Aussie is also under pressure after disappointing data from China, Australia’s largest economic partner. Recently, official data showed that China’s industrial production growth decelerated more than expected last month.

The factory output increased by 4.7% in annual terms, below the expected figure of 5.4% growth.

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