Australia’s unemployment rate lifts slightly but labour market still tight in June

Economists have declared Australia’s labour market is strong, with 50,200 jobs create in June and a narrow lift in the unemployment rate.

The jobless rate lifted 0.1 percentage points to be 4.1 per cent, according to the Australian Bureau of Statistics.

The numbers show rising interest rates and slow growth have not yet significantly dented employment — and will be unlikely to force the Reserve Bank to slow its inflation fight. Unemployment is lower than what most economists think is sustainable long-term.

It comes after recent shock inflation figures showed prices rose 4 per cent in the year to May, adding pressure on the Reserve Bank to lift interest rates.

ABS head of labour statistics Bjorn Jarvis said the level of Australians employed as a share of the population was near record highs.

“This, along with the continued high level of job vacancies, suggests the labour market remains relatively tight, despite the unemployment rate being above 4 per cent since April,” Mr Jarvis said.

VanEck head of investments and capital markets Russel Chesler said the labour market was “too strong for inflation to fall”.

“With unemployment so low, it is really difficult to see how inflation is going to slip back into the RBA’s target range of 2 per cent to 3 per cent.”

“It’s a tough pill to swallow, but the reality is that an unemployment figure of at least 4.5 per cent would be needed to cool inflation.”

He said rising property prices, rents and an increase to the minimum wage would also add to the pressure.

But CreditorWatch chief economist Anneke Thompson declared the data was positive news for the RBA.

“(The RBA) are keen to maintain strong employment while getting inflation back into the target band — the ultimate threading of the needle, Ms Thompson said.

“So far, they are succeeding on the employment side, but it remains to be seen if inflation can be pushed back into the band at the current monetary policy setting.”

ANZ said jobs growth had been much stronger than predicted although the market was slowing.

The big four bank maintained that the RBA’s next move would be a cut, likely in February.

Earlier this week, NAB reckoned Australia’s unemployment rate would rise to 4.5 per cent by the end of the year.

On Monday, Judo Bank said employment data had been strong so far in 2024.

“The rise we have seen in the unemployment rate has been predominantly driven by strong population growth,” Judo Bank chief economic advisor Warren Hogan said.