Australia’s unemployment rate remained steady at a seasonally adjusted 5.2 per cent in June as an election-related jobs boost receded and the effect of cash rate cuts were yet to materialise.
Economists had expected the overall jobless rate to remain unchanged in the first read on the labour market since the Reserve Bank of Australia’s bid to stimulate economic growth with a cut to interest rates.
The number of employed persons rose by a net 500 in June to 12.87 million according to Thursday’s data from the Australian Bureau of Statistics, with a 21,100 increase in people with full-time work offsetting a 20,600 decrease in people with part-time work.
The participation rate remained steady at 66 per cent, and underemployment dropped from 8.6 per cent to 8.2 per cent thanks to the boost in full time work.
Callum Pickering at job site Indeed said the figures, while again underwhelming, were unlikely to change the RBA’s immediate outlook as it pushes towards a 4.5 per cent unemployment target.
“Employment growth is still quite strong on a trend basis but rising slack could weigh on wage growth and inflation,” Mr Pickering said.
“Putting the pieces together, another rate cut appears more likely than not… November is the most likely month, aligning policy with an updated set of RBA forecasts.”
BIS Oxford economist Sean Langcake said the RBA would look for further growth in the coming months, and for the unemployment and underemployment rates to go down, which would ultimately encourage wage growth.
“With people continuing to enter the labour market and or seek more hours than they currently work, there is very little supply side pressure on wages,” Mr Langcake said.
“And with labour productivity falling, firms cannot sustainably increase wages for workers without reducing their profit margins.”
NAB economist Kaixin Owyong said a weightier clue could come with the June quarter inflation figures on July 31.
“Barring a surprisingly weak inflation print in two weeks, we continue to forecast another rate cut… in November, albeit with risk of an earlier move,” Ms Owyong said.
Minutes from the RBA’s July board meeting showed members have left the door open for a third rate cut to a new record-low 0.75 per cent as the central bank seeks to eat into spare capacity and stimulate economic growth.
JP Morgan’s Ben Jarman said Thursday’s data was a reminder that unemployment is quite some way from the RBA’s target, and that it will be tough going to get there.
“With the (4.5 per cent estimate), and officials’ desire to achieve it having been made surprisingly explicit, this distance will be remarked at every month’s labour force survey release, and is likely to keep the pressure on the RBA to ease again,” Mr Jarman said.
In seasonally adjusted terms, the largest decrease in employment numbers for June came in NSW, down by 17,400, followed by Queensland (down 8,200), South Australia (down 4,700) and Victoria (down 4,100).
The only monthly increase was a 13,800 rise in employed people in Western Australia.
The ACT retains the nation’s lowest unemployment rate with 3.4 per cent, followed by NSW at 4.5 per cent, the Northern Territory with 4.6 per cent, and Victoria with 4.7 per cent.
Seasonally adjusted monthly hours worked in all jobs decreased by 100,000 hours in June while the employment to population ratio decreased by 0.1 basis points to 62.5 per cent.
The Australian dollar jumped slightly after the data’s release from 70.21 US cents to 70.26 US cents, and again rose to 70.28 cents by 1250 AEST.