Unemployment unexpectedly rises as experts issue warning to households

Australia’s unemployment rate unexpectedly rose to 4.5 per cent in July, as 15,800 people lost their jobs.

The seasonally adjusted figure rose 0.1 per cent on the previous month in weaker-than-expected results released by the Australian Bureau of Statistics on Thursday.

The number of unemployed people rose by 4200 to 691,500, while the participation rate dropped 0.2 per cent to 66.9 per cent.

Experts said it was still too early to say whether the figures would dramatically shift the Reserve Bank of Australia’s position on interest rates.

BNY market strategist Wee Khoon Chong said the latest data was an initial sign that tight labour market conditions were easing – which could aid the case for those arguing against further rate hikes – but warned that unemployment can be volatile.

“Next week’s July inflation data will be a more important anchor point for the RBA outlook,” he said.

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“We maintain our view that it is too early to call an end to the tightening cycle.

“With elevated crude oil prices and still-tight labour conditions posing upside inflation risks, we see a chance for further monetary policy tightening.”

Ebury economist Anthony Malouf said the slow labour market is unlikely to shift the RBA’s stance.

“However, the July print may offer the RBA some confidence that the labour market is loosening as intended, which in turn should help ease inflation pressures over time,” he said.

“The data also reinforces our long-standing view that the RBA’s hiking cycle is over, with focus now turning to July’s CPI print due next week.”

Treasurer Jim Chalmers said it was unsurprising to see unemployment tick up considering the global challenges.

“The fact that our unemployment rate remains relatively low in the face of so much global uncertainty, reflects the resilience of Australia’s economy,” he said.

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“More than 1.25 million jobs have been created on our watch, most of them full-time.”

Deputy Opposition Leader Jane Hume said more and more Australians are out of work and chasing jobs.

“That is not what a strong labour market looks like – it is what happens when job opportunities fail to keep pace with the people looking for work,” she said.