(Bloomberg) — Australia added more than twice the number of jobs economists expected in June, highlighting the resilience of the country’s labor market to elevated interest rates.
The currency rose and the yield on policy sensitive three-year bonds climbed after official data Thursday showed employment grew by 50,200 roles — driven by full-time jobs. Economists had forecast a gain of 20,000. The jobless rate ticked up to 4.1% as more people sought work.
Money markets see an almost one-third chance of an interest-rate hike on Aug. 6, up from a roughly one-in-four chance prior to today’s data release. Stocks extended losses.
The report comes ahead of the Reserve Bank of Australia’s August board meeting, with some economists predicting it may tighten policy further to take the benchmark rate to 4.6% — a level not seen since October 2011. All eyes are on a second-quarter inflation report due July 31.
Bjorn Jarvis, ABS head of labor statistics, noted that the employment-to-population ratio and participation rate were both near 2023 highs, suggesting the labor market remains tight even though the jobless rate has ticked up.
Thursday’s data follows stronger-than-expected retail sales earlier this month and still-resilient business confidence, indicating Australia’s economy is coping well with the RBA’s hikes so far. The central bank has raised rates by 4.25 percentage points between May 2022 and November 2023 to take the cash rate to a 12-year high of 4.35%.
Despite the tightening, price pressures remain persistent and at 3.6%, inflation is still well above the RBA’s 2-3% target band.
“If we get that stronger CPI on July 31 then you could see another hike at the August meeting,” said Diana Mousina, deputy chief economist at AMP Ltd. “It’s definitely a live meeting.”
The RBA describes its current policy setting as restrictive and one that has already hit consumer spending, while helping to cool still-elevated inflation.
Thursday’s data showed annual jobs growth slowed to 2.8% in June from 3.3% a year earlier.
Thursday’s labor data also showed:
- Underemployment decreased to 6.5%
- The economy added 43,300 full-time roles and 6,800 part-time
- The participation rate climbed to 66.9% from 66.8%
- The employment-to-population ratio rose to 64.2%
–With assistance from Shinjini Datta and Matthew Burgess.
(Adds economist comments, updates markets reaction.)
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