Australia's Jobless Rate Climbs to 4.5% in July, Pressuring RBA
Australian employment fell unexpectedly in July, pushing the jobless rate to a near five-year high of 4.5%.
Australia's labour market showed fresh signs of cooling in July, with the unemployment rate rising to 4.5% — its highest level since late 2021. The latest figures from the Australian Bureau of Statistics revealed a net decline of 15,800 jobs during the month, a sharp reversal from the revised gain of 80,300 recorded in June and well below market expectations of a 15,000 increase.
The softer jobs data weighed on the Australian dollar, which slipped 0.2% against the US dollar to $0.7111. The report also complicates the Reserve Bank of Australia's (RBA) policy path, as markets remain divided on the possibility of a fourth rate hike this year.
While total employment dipped, full-time positions actually rose by 16,300. The unemployment rate ticked up from 4.4% as the participation rate eased to 66.9%. Hours worked fell by 0.6%, while the underemployment rate held steady at 6.4%.
The RBA has pointed to a gradually easing labour market as a key reason for holding its policy rate at 4.35% last week, following three hikes earlier in the year. Separate data released on Wednesday showed wages growing at a moderate pace for a fifth consecutive quarter.
However, policymakers have cautioned that further tightening remains possible if inflation risks materialise. They have cited the Middle East conflict, the global AI boom, and poor productivity as factors that could fuel price pressures.
RBA Deputy Governor Andrew Hauser said on Wednesday that the central bank needs to see more evidence of a slowdown in the labour market. The RBA currently projects the unemployment rate to reach 4.5% by the end of the year, before peaking at 4.8% in 2028.