Employers hired more workers than expected in June, pushing Australia's (AUS) unemployment rate to its lowest level in nearly 50 years and reinforcing expectations of further central bank rate hikes, MarketMatrix.net reported. .
The labor market report released by the Australian Bureau of Statistics (ABS) shows that in June, Australia added 88,400 new jobs, mainly driven by the accelerated growth of full-time positions. Economists predict an increase of 30,000. At the same time, the unemployment rate plummeted 0.4 percentage points to 3.5%, the lowest level since August 1974. The labor participation rate of and increased to 66.8%.
"The unemployment rate fell by 0.4 percentage points this month. This reflects a higher than usual number of people entering the labor market and a lower than usual number of unemployed people," said Bjorn Jarvis, ABS director of labor statistics. “These flows reflect an increasingly tight labor market, high demands on employers to recruit and retain workers, and ongoing labor shortages.”
Australia’s unemployment rate fell to 3.5% in June, the lowest level in 48 years_By Bloomberg
“ The current number of unemployed people is based on the same number of job vacancies, which means there are 31 unemployed people per job vacancy, compared with 3.1 before Covid-19,” he stressed. After the release of
data, the Australian dollar was almost unchanged against the US dollar.
Australia's job vacancy rate has hit a record high, suggesting unemployment will fall further. The figures are likely to prompt policymakers at the Reserve Bank of Australia (RBA) to continue accelerating policy tightening to control soaring inflation.
Since May, the Reserve Bank of Australia has raised interest rates three times in a row, with the policy interest rate rising from 0.1% during the epidemic crisis to 1.35%. The RBA back-to-back trend has risen 125 basis points to 1.35%, with the bank widely expected to maintain its lead in tightening policy for the remainder of the year.
"With an incredibly strong labor market, the Reserve Bank of Australia can respond to inflation more aggressively than other central banks," said Harry Murphy Crews, an economist at Moody's Analytics. "Yes, higher interest rates will weaken demand, but as employers need more workers, we shouldn't see higher borrowing costs leading to higher unemployment."
Notably, the labor force participation rate - - The proportion of the population working or looking for work - - rose to 66.8%. This is consistent with an increasing number of job openings being left unfilled - a driver of continued wage growth.
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