As the unemployment rate ticked higher to 4.1 per cent on Thursday, stronger-than-expected job creation hinted at economic resilience that will keep the focus on price pressures before the next cash rate meeting in August.
The June labour force update from the Australian Bureau of Statistics showed 50,200 jobs were created, more than double the 20,000 expected by economists, with most of those positions full-time.
But this was not enough to offset migration-driven growth in the labour force, with the participation rate reaching a near-record high.
"With employment rising by around 50,000 people and the number of unemployed growing by 10,000 people, the unemployment rate rose slightly to 4.1%, and the participation rate rose to 66.9%," — Australian Bureau of Statistics (@ABSStats) @Bjorn_Jarvis , ABS head of labour statisticsVisit https://t.co/iDU2e09k1I pic.twitter.com/hvJrWlY7ccJuly 18, 2024
This pushed the rate of unemployment to 4.1 per cent, up from four per cent in May.
Betashares chief economist David Bassanese said the "solid" labour force report, together with decent retail sales growth, meant the RBA could go into its next meeting "not overly concerned about the underlying strength in the economy".
June quarter inflation figures due later in the month would "make or break" the case for an interest rate hike, he said.
Mr Bassanese's base case was for consumer price data to come in just shy of forcing the RBA to go higher, but anything above four per cent for trimmed or headline inflation could spell trouble.
"That's because a higher-than-expected consumer price index would make it harder for the RBA to continue to believe inflation will fall to within the two to three per cent target band by end-2025 without further monetary tightening," he said.
Hours worked rose 0.8 per cent in June, which the statistics bureau partly attributed to less people taking annual leave than they usually do in June.
More than 50,000 jobs were created during June, according to the ABS. (Dan Himbrechts/AAP PHOTOS)
But working in the other direction was more people than usual working fewer hours because of illness.
Consistent with the uptick in hours worked, the underemployment rate fell 0.3 percentage points to 6.5 per cent.
Commonwealth Bank of Australia head of Australian economics Gareth Aird said the labour market had proved surprisingly strong considering higher interest rates had weakened the economy substantially.
That could largely be explained by employment growth in sectors such as health, social assistance, education and other non-market fields, with a big increase in spending on the National Disability Insurance Scheme supporting job creation.
"In contrast, market employment, where outcomes are strongly linked to the business cycle, has seen essentially no growth over the past year," Mr Aird said.
His expectation was for non-market employment to ease going forward, leading to slower employment growth and pushing the jobless rate higher.
New data shows the — Jim Chalmers MP (@JEChalmers) @AlboMP @AustralianLabor Government has created more jobs in a parliamentary term than any government in history. We've created almost 930,000 jobs since we came to office – faster jobs growth than any major advanced economy. #auspol #ausecon pic.twitter.com/jB2PTR0r0tJuly 18, 2024
Treasurer Jim Chalmers said Labor was creating jobs faster than any other major advanced economy, with almost 930,000 added since taking office.
"This is encouraging but we also know persistent inflation globally and higher interest rates are weighing on our labour market and our economy," he said.
Shadow Treasurer Angus Taylor said more Australians were seeking work and taking on more hours.
"While the government keeps patting itself on the back, the reality is a record number of Australians are working multiple jobs to make ends meet," he said.
