Job creation is running at a gallop amid a flood of Australians looking for work, with fresh numbers backing up the Reserve Bank’s reluctance to cut interest rates.
The unemployment rate lifted slightly to 4.2 per cent in July, according to data from the Australian Bureau of Statistics.
That’s up from 4.1 per cent in June.
But the good news was that employment lifted by about 58,000 in the month, dramatically higher than market forecasts. Full-time jobs passed 10 million.
A record number of Australians were either in work or looking — measured by the participation rate — at 67.1 per cent of adults, the ABS said.
The rising participation rate means the increase in unemployment is likely driven by Australians entering the labour market, rather than losing their jobs.
Taken together, the numbers would be unlikely to shake the Reserve Bank off course on interest rates, which the central bank has said are not likely to be cut for the remainder of 2024.
“Today’s key surprise was just how strong job creation continues to be in Australia,” HSBC chief economist Paul Bloxham said.
“It is pretty clear that labour demand remains strong.”
Mr Bloxham said there were also plenty of workers flowing into the system, boosted by migration.
“This is… the best kind of jobs market loosening,” he said.
“Far better to loosen the jobs market with more workers than (through) lay-offs.
“It is also a key part of the ‘soft landing’ that the Australian economy is going through.”
UBS said the numbers add to the case for the RBA to hold rates — predicting punters will need to wait until May for a cut — while Betashares chief economist David Bassanese said rates would remain “firmly on hold” through 2024 at least.
Mr Bassanese said the data was “relatively mixed”.
Markets had expected jobs growth of just 20,000, he said.
“What’s more, all of the growth in employment was full-time workers, which rose by a whopping 60,500 while part-time employment dropped by 2,300,” Mr Bassanese said.
“Despite weakness in consumer spending, the economy retains the capacity to find jobs for tens of thousands of Australians each month.”
But he warned the economy was “slowly losing its ability to absorb all Australians willing and able to work”.
The unemployment rate has been gradually lifting from the multi-decade lows achieved as the country came out of the pandemic, when demand surged following significant stimulus.
The Reserve Bank last week predicted unemployment would “keep slowly rising until early 2025”.
On Wednesday, ANZ predicted the national economy would be in recovery mode through the next 12 months.
The big four bank reckons business investment will be stronger than previously thought and expected tax cuts would spur punters to lift spending.
Economic growth will run at 2.1 per cent for the 2025 financial year, ANZ said. That’s up from a sluggish 0.9 per cent anticipated in the 12 months to June 2024.
Real household disposable income — pay adjusted for inflation and tax — will surge 4.5 per cent following tax cuts and cost of living support.