Despite most leading indicators pointing to rising unemployment, today’s June labour force report from the Australian Bureau of Statistics (ABS) showed no change in the nation’s unemployment rate, which remained at 4.4%.
The internals were also strong. As illustrated below, the total number of people employed jumped by 76,300 (29,300 full-time), and the unemployment rate remained steady only because the labour force participation rate rose by 0.3%:
The number of hours worked also lifted by 0.2% in June, whereas the only blemish was that the underemployment rate rose by 0.2% to 6.5%.
Thus, this release was unambiguously strong and places the RBA in an awkward position leading into next month’s monetary policy meeting.
The June CPI will be released next Wednesday, and a moderately strong print will inevitably force the RBA to hike.
Indeed, the latest public survey by the RBA revealed that inflation was the number one economic concern for Australians, followed by housing as a distant second and then interest rates.
Given that the RBA is the only policymaker that will do anything material to bring inflation back to target, it will be compelled to act, especially given today’s strong labour market report.
