Job losses take pressure off RBA and interest rates

Following Wednesday’s weaker-than-expected wage growth data, the Australian Bureau of Statistics (ABS) released its July labour force survey on Thursday, which reported rising unemployment.

The nation’s unemployment rate rose 0.1% to 4.5% after 15,800 jobs were lost. However, full-time employment rose by 16,300, more than offset by a 32,200 decrease in part-time jobs.

The number of hours worked also fell by 0.6% in July, and the labour force participation rate declined by 0.2%.

As Callam Pickering from Indeed shows below, Australia’s unemployment rate increase of 4.5% in July is only slightly below its post-pandemic peak from April. The Reserve Bank also anticipates rising unemployment in the period ahead:

When coupled with Wednesday’s weaker-than-expected wage growth data, the labour market could be considered somewhat “soft”.

Overall, this week’s labour market data suggests that the RBA will keep rates on hold.

There is no urgency to hike or cut at this stage.