Hot Take: The labour market keeps on trucking

The latest labour force data for the month of December were just released, the first of a few key indicators that are due to drop ahead of the Reserve Bank of Australia's (RBA) next meeting on 18 February.

In this Hot Take I'm going to start with the employment numbers themselves, follow it up with a look at several indicators that were released since the last update, before wrapping up with what it might mean for inflation and interest rates.

By the numbers

Australia's unemployment and participation rates ticked up ever so slightly (0.1 percentage points) to 4.0% and 67.1%, respectively, in December. The trend continues to suggest a tightening of the labour market:

That's supported by the employment-to-population ratio and hours worked, which both hit new highs:

These data mean that the RBA can rest easy about the full employment side of its dual mandate and focus on getting aggregate demand back down to Earth, with the forthcoming December quarter consumer price index (CPI) the last remaining piece of the puzzle.

Further context

Since last week's monthly CPI update a few official and market-based indicators were released, including retail sales, job vacancies, ANZ/Indeed job ads, and the Melbourne Institute's monthly inflation gauge. Bond yields have also been moving across the world, with implications for the longer term inflation outlook.