Australia: Unemployment rate rises in July
The seasonally adjusted unemployment rate ticked up to 4.2% in July from June’s 4.1% reading, surprising markets on the upside. July’s reading marked the joint-highest unemployment rate since January 2022. That said, seasonally adjusted employment rose by 58,200 in July, improving from the 50,200 increase recorded in June; a stronger increase in full-time employment outweighed a fall in part-time employment. Moreover, also in seasonally adjusted terms, the labor-force participation rate increased by 0.2 percentage points to 67.1%—a new all-time high and above market expectations—and the underemployment rate fell by 0.1 percentage points to 6.3%.
Commenting on the outlook, ING’s Robert Carnell stated:
“There may be some concern that the unemployment rate has risen from 4.1% to 4.2%. However, the blame for this can be levelled firmly at the door of the rise in the labour force, where another strong monthly increase will have left some new entrants still without work […]. We expect most of these new jobless will be swallowed up in next month’s employment gains, with some initially getting part-time work before converting to full-time jobs.”
United Overseas Bank analyst Lee Sue Ann added:
“The latest readings signify a tight labour market that supports wage growth. Inflation has also remained more persistent than expected. This reinforces our view that the Reserve Bank of Australia (RBA) remains some way from cutting interest rates. […] The RBA expects the jobless rate to rise to 4.3% by Dec, a level that it would consider to be close to full employment. Our view is for the unemployment rate to rise to around 4.5% and stay there through 2025.”