Australia’s unemployment rate ticks up to 5.8pc in June

Labour market growth undershot expectations in June as the jobless rate edged up to 5.8pc, but fulltime work surged.

The ABS figures show a surge in fulltime job growth, reversing a recent trend.

Australian labour market growth has marginally undershot expectations with just 7,900 jobs added in the month of June, but the finer details of the official report helped push the Australian dollar higher.

The broad number compared unfavourably to analyst expectations for a rise of 10,000, while the unemployment rate ticked up 0.1 per cent to a four-month high of 5.8 per cent, in line with forecasts.

The jobless number climbed as the participation rate ticked up to 67.9 per cent.

However, the make-up of the job gains impressed traders as the Australian Bureau of Statistics said full-time positions surged 38,400, while part-time employment slid 30,600.

The figures represent a sharp turnaround in a trend that has seen part-time employment growth recently comfortably outpace fulltime jobs.

At 1pm (AEST), the Australian dollar jumped to US76.25c, up from US76c prior to the release.

Meanwhile, the Australian sharemarket largely held its early gains, recently trading up 0.3 per cent.

The increase in full-time jobs helped arrest, but not quite turn, a trend of reduced working hours.

“The figures show that hours worked by employed people declined, but not by as much as in previous months,” ABS macroeconomic statistics general manager Bruce Hockman said.

“We are yet to see an increase in hours worked in 2016.”

The 7,900 lift in jobs follows an upwardly revised rise of 19,200 in May and a 10,800 advance in April.

Westpac senior economist Andrew Hanlan noted jobs growth had slowed sharply after a strong finish to 2015, but said other indicators pointed to improvement later this year.

“Our assessment is that the labour market will regain momentum over the second half of this year, consistent with positive fundamentals,” he said.

“Activity is jobs friendly currently, with low interest rates driving a home building boom and the lower dollar boosting labour intensive service sectors, such as education and tourism.

“Moreover, private business surveys report that actual business conditions are at elevated levels.”

Capital Economics chief Australian economist Paul Dales said the figures left the labour market in “reasonable shape”, but he sees plenty of spare capacity in the market given part-time employment retains a high share.

“The bulk of the rise in employment over the past year has been due to more part-time jobs. Some of those employees would probably like to work longer,” he said.

“The resulting spare capacity explains why wage growth is at a record low and why the RBA is more worried about the weak outlook for inflation than the outlook for the unemployment rate.”

Employment Minister Michaelia Cash said the “fundamentals” of the economy remained “strong” despite the modest rise in joblessness.

“In recent months there have been significant international events which have created turbulence and a level of economic instability, whether in terms of headwinds in China or the uncertainty created around Brexit,” Senator Cash said.

“Despite this, the Australian economy continues to create jobs and demonstrates encouraging resilience.”

Labor employment spokesman Brendan O’Connor said the elevated unemployment rate proved the hollowness of the Coalition’s “jobs and growth” mantra.

“Of particular concern is the climbing youth unemployment rate which has jumped from 12.4 per cent to 13.2 per cent,” Mr O’Connor said.

“With 280,500 young people unemployed, Australians need more than the Turnbull government’s cruel plans to force young people to live without any support for a month, while also encouraging them to take up exploitative supermarket ‘internships’.”

The figures paint a murky picture for the Reserve Bank ahead of its August board meeting, with the door left open to a rate cut should inflation numbers disappoint in two weeks’ time.

Futures markets are currently pricing in a 52 per cent chance of a rate cut next month, edging up from a 49 per cent chance prior to the jobs data.

On a state-by-state basis, Victoria comfortably outperformed all others with 24,200 jobs gained on the month, while South Australia’s 4,600 lift served as the next best performance.

New South Wales turned laggard with 11,900 jobs lost, while the mining states of Western Australia (-10,300) and Queensland (-1,400) also posted reductions.

Despite the job losses in WA it was one of only two states to record a drop in its unemployment rate. Both WA and Victoria noted a dip in their jobless rates to 5.7 per cent, from 5.8 per cent.

The two are the closest to the market-leading rate of NSW, where the unemployment rate climbed from 5.1 per cent to 5.3 per cent in June.

South Australia remains the nation’s weakest labour market, with its jobless rate edging up 0.2 per cent to 7 per cent despite an increase in employment numbers.

With Jared Owens