Employment surges by 58k as rate cut hopes falter
With Reserve Bank governor Michele Bullock all but ruling out a rate cut this year, new jobs figures are likely to affirm the view that the central bank will keep the cash rate firmly on hold.
A bumper month of jobs growth in July as the participation rate hit a record high is likely to affirm the view that the Reserve Bank won’t start easing interest rates until next year.
The unemployment rate edged higher to 4.2 per cent last month, the Australian Bureau of Statistics said on Thursday, up from 4.1 per cent in June.
The result, which was a touch higher than economists’ forecasts of 4.1 per cent, came even as the economy added 58,200 new jobs - almost triple consensus estimates.
Despite the strong employment growth, the slight lift in the jobless rate was due to an increase in the number of people looking for work, spurred by overseas arrivals and people entering the jobs market in the wake of mounting cost of living pressures.
Indeed, the participation rate – the proportion of Australia’s working age population in work or looking for a job – climbed 0.2 percentage points to a record of 67.1 per cent.
“There continues to be a high number of people in jobs, and looking for and finding jobs,” ABS head of labour statistics Kate Lamb said.
Across the month, the number of full-time positions soared 60,500, however the increase was slightly offset by a decline in the number of part-time roles, down 2,300, the seasonally adjusted data showed.
About 38,000 new jobs need to be created every month to keep the unemployment and participation rate stable.
While broadly as expected, the jobs figures are unlikely to ease RBA governor Michele Bullock’s continued concerns about excess demand in the labour market, which couple with other key economic indicators has led her to effectively rule out a rate reduction until 2025.
Since mid-2023 when the key jobless measure sat at 3.5 per cent, the unemployment rate has slowly drifted higher as the economy has struggled to absorb the surge in net overseas migration. However, the rate still remains well short of its pre-pandemic average of around 5 per cent.
The RBA expects the unemployment rate to rise to 4.3 per cent by year’s end, a forecast the jobs market looks on track to meet.
More to come.
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