Australia’s labour market showed unexpected weakness in July, with the national unemployment rate climbing to 4.5%, the highest level since late 2021. The rise comes after the Australian Bureau of Statistics reported a net loss of 15,800 jobs compared with June, which had previously added a revised 80,300 positions.
Job numbers and participation
While full‑time employment still grew, adding 16,300 jobs, the overall picture was a decline. Economists had forecast a modest increase of 15,000 jobs for the month, so the actual loss was a surprise. The labour‑force participation rate slipped to 66.9%, and the average weekly hours worked fell by 0.6%. Underemployment held steady at 6.4%.
Impact on the Reserve Bank of Australia
The weaker data gave the Reserve Bank of Australia (RBA) a reason to hold its policy rate steady at 4.35% after three hikes earlier this year. RBA Deputy Governor Andrew Hauser said the central bank needs to see a clearer slowdown in the labour market before considering further tightening. The bank expects the unemployment rate to edge up to 4.5% by year‑end and to peak at 4.8% in 2028.
Currency reaction and market outlook
The Australian dollar fell 0.2% against the U.S. dollar, trading at $0.7111 after the release. Markets remain divided on whether the RBA will implement a fourth rate rise this year, with inflation trends and external risks—such as the Middle East conflict, the global artificial‑intelligence boom, and persistent productivity challenges—still influencing expectations.
Wage growth and inflation
Despite the job losses, wages continued to rise at a moderate pace for a fifth consecutive quarter, according to data released the previous day. Policymakers warned that if inflationary pressures re‑emerge, especially from geopolitical tensions or slower productivity gains, the RBA could resume tightening.
Overall, the July labour‑market report suggests a modest cooling that may give the RBA breathing room, but the outlook remains uncertain as domestic and global factors continue to evolve.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
