Australia's employment figures for June have blown past all forecasts, adding 76,300 jobs—the largest monthly increase since April last year. The unemployment rate held steady at 4.4%, while the participation rate climbed to a one-year high of 67.0%. This robust performance signals economic resilience and has fueled market speculation of another interest rate hike.
Key Highlights:
- Net employment surged by 76,300 in June, far exceeding the expected 15,300 gain.
- Annual job growth accelerated to 1.7% from 1%.
- Participation rate rose to 67.0%, driven by more older Australians joining the workforce.
- Hours worked edged up 0.2% after a decline in May, but underemployment ticked higher to 6.5%.
Market Reaction: The Australian dollar jumped 0.3% to $0.7020, and three-year government bond yields fell. Markets now price a 33% chance of a rate hike in August and a 97% chance by year-end, up from 78% before the data.
Inflation Concerns Persist: The Reserve Bank of Australia (RBA) has already raised rates three times this year to 4.35% to combat inflation, which accelerated to an annual 4% in May. Underlying inflation rose to 3.6%, well above the target band of 2-3%. Rising oil prices, with Brent crude above $95 a barrel, add further inflationary pressure.
Expert Insights:
- Cameron McCormack of VanEck noted the labour market is "determined not to give the RBA the breathing room it needs," firming the prospects of another rate rise.
- Tony Sycamore of IG highlighted that the RBA's key concern is tightness feeding into wage growth and inflation, especially with crude oil up 26% this month.
The data underscores a resilient labour market that complicates the RBA's fight against inflation, keeping the door open for further policy tightening.
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