Jobless rate posts surprise fall as 33,000 more people find work

Economists believe that the impressive job figures, which surpassed expectations, will make it a difficult decision for the Reserve Bank to determine whether or not to adjust interest rates in August.

Australia's joblessness rate has declined to 3.5 percent, with nearly 33,000 individuals securing employment in the previous month.

Economists had predicted that the unemployment rate would stay constant at 3.6 percent in June, while approximately 15,000 jobs would be generated.

Nevertheless, according to the latest data from the Australian Bureau of Statistics, the rate of unemployment experienced a minuscule decrease when compared to the recalibrated figure from May, which stood at 3.5 percent.

According to Tony Sycamore, an IG expert, the financial markets have currently factored in a likelihood of over 40 percent that interest rates will increase at the upcoming RBA board meeting on August 1st.

He stated that the recent job data, which surpassed expectations and caused the unemployment rate to approach a record low in nearly 50 years, disregards the fact that the Reserve Bank of Australia has increased interest rates by 400 basis points. As a result, there is absolutely no possibility for an unexpected positive outcome in the upcoming Q2 inflation data to be released next Wednesday.

This is particularly true considering the Reserve Bank of Australia's expressed worries regarding the increase in wages and inflation.

According to Mr. Sycamore, if the inflation rate for the June quarter is significantly higher than the predicted 6.2 percent, it is highly possible that there will be another increase in interest rates. This data is expected to be released next Wednesday.

On the other hand, according to Anders Magnusson, a partner in economic research at BDO, it would be more beneficial for the Reserve Bank to view the ongoing robustness of the job market in a positive light.

He stated that the RBA's 'limited route' is expanding, as joblessness remains low while inflation declines.

The consequences of the recent increase in interest rates have yet to fully materialize, therefore the future trajectory of the economy will be influenced by both the previous decisions made by the Reserve Bank of Australia and their forthcoming actions.

Considering that the level of joblessness is not on the rise, it would be prudent for the Reserve Bank of Australia to maintain the current cash rate in the upcoming month, thereby permitting this sustained and optimistic pattern to proceed without interruption.

Work Hours Reach Highest Point In 10 Years

The proportion of individuals aged 15 and above who are either employed or actively seeking employment experienced a slight decrease from the previous month's highest-ever recording of 66.9 percent to 66.8 percent. This was an additional contributing factor in maintaining a low unemployment rate.

However, Bjorn Jarvis, the ABS's chief of labor statistics, affirms that there has been a substantial increase in the number of Australians who have found employment.

He noticed that not only are there over a million more individuals with jobs compared to pre-pandemic times, but also a significantly larger proportion of the population is gainfully employed.

As of June 2023, the employment rate for individuals aged 15 and above stood at 64.5 percent, experiencing a rise of 2.1 percent from March 2020.

Moreover, the individuals who are currently employed are dedicating more time to their work. Their working hours have escalated by 4.7% within the last year, surpassing the mere 3% growth in the employment rate.

This implies that a larger number of Australians are currently engaged in full-time employment, accounting for 70.2 percent of those who are employed. This represents the highest proportion since December 2012.

Mr. Jarvis highlighted that there has been a significant and fast increase in the number of women working full-time. Before the pandemic, only 54.2% of employed women were working full-time, but as of June 2023, this percentage has risen to 57.9%. This is the highest it has been since 1994.

In contrast, the rise in the proportion of men with jobs working full-time was not as significant. It went up from 80.9 percent before the pandemic to approximately 81.5 percent in June, reaching a similar level as in 2018.

The rate of underemployment remained unchanged at 6.4 percent, reaching its highest point since February of the previous year. Nevertheless, it is significantly lower than the consistent rates above 8 percent that were observed in the years preceding the pandemic.

Published 2 hours ago on Thursday, July 20, 2023 at 1:36am, revised 51 minutes ago on Thursday, July 20, 2023 at 3:16am.