Australia’s resilient labour market has strengthened the case for another Reserve Bank interest rate hike, after unemployment held steady despite ongoing cost of living pressures and higher borrowing costs.
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Australian Bureau of Statistics data released this week showed the unemployment rate remained unchanged at 4.4% in June, while the economy added more than 76,000 jobs, far exceeding expectations.
Around 47,000 of those new positions were part-time.
The stronger-than-expected figures sparked an immediate market reaction Down Under, with the Australian dollar climbing above U.S. 70 cents on Thursday as investors reassessed the outlook for future interest rates.
The labour market’s continued strength is expected to keep pressure on the RBA as it tries to bring inflation back into its 2-3% target range.
Economists say next week’s June quarter inflation figures will be the key test for whether the central bank decides to raise rates again. The RBA has previously argued there is little evidence of a wage-price spiral developing, despite recent increases in award wages.
The jobs report also showed around 13,000 Australians lost employment during the month, but a rise in workforce participation to 67% kept unemployment unchanged.
ABS head of labour statistics Sean Crick said part of June’s employment surge reflected the timing of people who had delayed starting new jobs during May.
Some economists now believe another rate rise this year is increasingly likely, with stronger labour market conditions reducing the Australian central bank’s room to manoeuvre in its ongoing battle against inflation.
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