Australia's economy demonstrates strong adaptability.

The Australian dollar weakened slightly, pressured by the strengthening U.S. dollar. The U.S. dollar's rise was driven by investors scaling back expectations for Federal Reserve interest rate cuts in 2025, despite upcoming economic data announcements next week. Australia's economic data revealed a further decline in unemployment, supported by an increase of 35,600 jobs. Currently, investors estimate nearly a 50% chance that the Reserve Bank of Australia (RBA) will implement its first interest rate cut in February, as inflationary pressures have eased somewhat.

The RBA held the cash rate steady at 4.35% during its latest meeting, maintaining this level for the ninth consecutive time, in line with market expectations. The central bank noted that while headline inflation had eased significantly and is expected to remain low for some time, core inflation remains too high. Policymakers expressed confidence that inflation will sustainably slow to the target range. Meanwhile, other recent data on activities showed mixed outcomes, aligning with forecasts. However, household consumption and other recovery metrics may be slower than anticipated.

Corporate profits in Australia contracted sharply by 4.6% quarter-on-quarter in Q3, missing market expectations of a 0.8% growth. This marked the third consecutive decline, following a 6.8% drop in Q2. The contraction in profits stemmed from slowing demand across various sectors.

Retail sales in Australia rose 0.6% month-on-month in October, accelerating from a modest 0.1% increase in September. Robert Ewing, Head of Business Statistics at the Australian Bureau of Statistics (ABS), commented that the growth in retail sales was driven by pre-Black Friday discounting, particularly in discretionary goods, which continued to see the largest sales increases.

The services PMI fell to 50.5 in November from 51 in October, reflecting a slowdown in the growth of service sector activities. However, this marked the 10th consecutive month of expansion. The growth was primarily supported by new business opportunities, which continue to sustain the current economy. Additional hiring is required to meet rising demand for new orders. However, input cost inflation remains high, compelling businesses to either pass on increased costs to customers or absorb some of the costs to maintain competitiveness and sales.

Australia's unemployment rate dropped to 3.9% in November from 4.1% in the previous quarter, the lowest level since March. The number of unemployed individuals decreased by 27,000 to 595,300, an eight-month low. This decline was largely attributed to fewer full-time job seekers, while part-time employment fell by 17,000. In contrast, full-time employment rose significantly by 52,600, resulting in a net job increase of 35,600. This highlights a labor market capable of adapting despite facing high interest rates.