(Aug 20): Australia’s unemployment rate unexpectedly rose in July, supporting the Reserve Bank’s (RBA) view that the labour market is likely to gradually loosen in the period ahead.
The jobless rate climbed to 4.5% last month, surpassing economists’ estimate for it to remain unchanged at 4.4%, data from the Australian Bureau of Statistics showed on Thursday. The economy shed 15,800 jobs — driven entirely by part-time roles — compared with a predicted 12,000 increase.
The Reserve Bank is still assessing the labour market to be “a little tight” after it raised interest rates at its first three meetings of the year to try to gain control over inflation. In its quarterly update of forecasts released last week, the central bank predicted the jobless rate would gradually drift higher over the next couple of years.
Australia’s labour market has proved surprisingly resilient in the post-pandemic period with the jobless rate hovering around historic lows even during policy tightening campaigns.
“Labour market conditions are still assessed to remain a little tighter than full employment,” the RBA said in its quarterly Statement on Monetary Policy released last week.
“This is consistent with growth in unit labour costs remaining elevated at 3.3% over the year to the March quarter,” it said. “There are also reports from liaison that many firms still note some labour market tightness, particularly in relation to difficulty in sourcing staff with appropriate skills and experience.”