By I. Hansana, Jadetimes News
Australia’s Unemployment Rises Slightly in June Amid Job Growth
Australia’s unemployment rate edged up to 4.1% in June, even as employers added the most new positions since February, as more people entered the job market. The Australian Bureau of Statistics reported on Thursday that the seasonally adjusted unemployment rate matched economists' expectations, rising from the 4% rate in May.
The economy saw the addition of over 50,000 jobs, surpassing the 20,000 predicted by economists. Full time roles increased by 43,300, and part time positions by 6,800. The participation rate, a measure of those seeking employment, rose by 0.1 percentage points to 66.9%, just shy of the record 67% set in November 2023.
Moody’s Analytics economist Harry Murphy Cruise noted that the labor market is "slowly softening," yet the strong employment growth and near record participation rate underscore its resilience amid economic challenges.
Federal Treasurer Jim Chalmers highlighted that the economy has added 930,000 jobs since the Albanese government took office in May 2022, a record for any parliamentary term. However, Chalmers acknowledged the pressures of global inflation and higher interest rates on the labor market and economy.
The recent labor figures, along with upcoming June quarter inflation data, will be critical for the Reserve Bank of Australia (RBA) as it meets on August 5/6 to decide on the cash rate. Before the release, investors saw a 15% chance of a 25 basis point increase to 4.6% next month.
Despite recent optimism for a rate cut to 4.1% due to global trends towards lower interest rates, markets do not fully anticipate such a move until mid 2025. Nonetheless, CBA and Westpac consider a rate cut in Australia possible by the end of this year.
The robust job creation bolstered the Australian dollar, which rose to 67.35 US cents, a gain of about 0.15 US cents on the jobs news. Meanwhile, stock markets saw a slight decline, down about 0.25%, reflecting investor sentiment that the labor data may deter any imminent RBA rate cuts and possibly suggest further rate hikes.
Blair Chapman, a senior economist at ANZ, predicts continued labor market slowing due to weak consumer sentiment and economic activity, with ANZ expecting the next RBA move to be a rate cut in February. Chapman suggested that a strong June quarter inflation result, due on July 31, might prompt an RBA hike, though this would conflict with broader economic data and expectations from other major central banks.
ABS head of labor statistics Bjorn Jarvis remarked that the labor market remains "relatively tight," noting a 0.8% increase in hours worked despite a higher than usual sickness absence rate in June. Approximately 4.5% of employed individuals were unable to work their usual hours due to illness, compared to the pre pandemic June average of 3.6%. Conversely, fewer people took annual leave, with 12.5% working fewer hours compared to the pre pandemic average of 14.5%.
The number of unemployed people rose by 10,000 to 608,000 in June, up 117,000 from the low in October 2022 but still about 100,000 fewer than pre COVID 19 levels, despite workforce growth. A separate NAB survey indicated that business conditions eased in the June quarter due to slow economic and consumer demand growth impacting trading conditions and profitability. However, 79% of firms reported labor availability as a constraint, suggesting ongoing hiring challenges.
Regionally, the lowest jobless rate was in the ACT, dropping from 3.8% in May to 3%. Queensland and South Australia saw slight declines in unemployment rates, while Tasmania’s rate fell to 3.7% from 4.1%. New South Wales and Victoria, which make up about half of Australia’s economy, posted modest rises to 3.9% and 4.5% respectively, with the Northern Territory having the highest rate at 4.6%.
