Australia's unemployment rate rose to 4.5% in July, exceeding expectations and pointing to a sharper-than-expected weakening in the labor market. Employment fell by 15,800 jobs in July, sharply missing forecasts for an 11,700 increase and reversing most of June's 76,300 gain. The unemployment rate rose from 4.4% in June and also came in above the 4.4% forecast.
Labor Market Trends
The weakness in headline employment was partly offset by a 16,300 increase in full-time employment, although that was well below the 29,300 gain recorded in June. The data nevertheless pointed to softer hiring momentum after a much stronger-than-expected June report.
Impact on Monetary Policy
The figures could strengthen expectations that the Reserve Bank of Australia (RBA) will keep interest rates on hold at its September meeting, after the central bank said in its August forecasts that labour-market conditions had eased by a little more than expected. According to IG senior markets analyst Tony Sycamore, a softer-than-expected number would reinforce the view that the labour market is loosening in line with the RBA's updated projections and raise the hopes the RBA may stay on hold into year end.
