June Labour Force print ‘positive news for the RBA’

The Labour Force data for June 2024 released by the Australian Bureau of Statistics (ABS) has shown the unemployment rate rose by less than 0.1 percentage point to 4.1 per cent during the month.

This followed the slight decrease in the previous month, which saw the unemployment rate hit 4 per cent in May.

In seasonally adjusted terms, the number of employed people increased by 50,200 (up 0.3 per cent) from 14,355,900 to 14,406,100, while the number of unemployed people rose by 9,700, from 598,500 to 608,200.

After holding steady in May, the participation rate saw a minor increase of 0.1 percentage points, up to 66.9 per cent.

Bjorn Jarvis, ABS head of labour statistics, said: “The participation rate in June was only 0.1 percentage point lower than the historical high of 67.0 per cent in November 2023.

“The employment-to-population ratio rose by 0.1 percentage point to 64.2 per cent, which was also close to its historical high of 64.4 per cent in November 2023.”

As the employment-to-population ratio and participation rate continued to sit near the highs of 2023, Jarvis said that this, along with an ongoing high level of job vacancies, suggests that the labour market remains “relatively tight”, despite an unemployment rate of above 4 per cent since April this year.

“Unemployment rose 10,000 people in June, following a fall of 9,000 in May. While it has increased from a low of 491,000 people in October 2022 to 608,000 in June, it is still around 100,000 people or 14.2 per cent lower than just prior to the COVID-19 pandemic,” Jarvis said.

RBA implications

Reacting to the data, CreditorWatch’s chief economist Anneke Thompson said this data print will “likely be taken as benign by both markets and the Reserve Bank of Australia (RBA)”.

“The unemployment rate remains well below pre-Covid levels, and labour force conditions are still strong, though not over-heating,” Thompson said.

“Overall, this is positive news for the RBA, who are keen to maintain strong employment while getting inflation back into the target band – the ultimate threading of the needle.

“So far, they are succeeding on the employment side, but it remains to be seen if inflation can be pushed back into the band at the current monetary policy setting.”

Tim Keith, managing director of Capspace, said that the tight labour market and strong employment numbers will “keep pressure on the RBA to maintain rates where they are”.

“Along with stubbornly high inflation, the RBA will not be lowering rates soon,” Keith said.

“With ongoing resilience in the labour force and the Australian economy, that will keep interest rates on hold for the foreseeable future, with more risk to the upside than the downside at the moment.

“As a result, we expect that the RBA will keep interest rates on hold at its August meeting.”

ANZ senior economist Blair Chapman reiterated the major bank’s stance of a rate cut called for February 2025.

“Combined with weak consumer sentiment and economic activity, the labour market is likely to continue slowing, which should see the next RBA move being a rate cut,” Chapman said.

“A very strong Q2 CPI print… could see the RBA hike but this would be at odds with broader economic data and the expectation of cuts from other major central banks.”

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Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.