Unemployment rate reaches highest level since November 2021

Australia’s unemployment rate increased to 4.2 per cent in July, up from 4.1 per cent the month prior in seasonally adjusted terms, according to the latest Labour Force figures released by the Australian Bureau of Statistics (ABS).

This has marked the highest level in the unemployment rate since November 2021, but still 1 percentage point lower than the 5.2 per cent in March 2020.

The number of unemployed people increased to 637,100 from 613,200 (up by 23,900), while the number of people entering employment increased by 58,200, from 14,411,300 in June to 14,469,600 in July.

Meanwhile the participation rate during July increased to 67.1 per cent from 66.9 per cent, while the monthly hours worked in all jobs increased by 7 million (0.4 per cent) from 1,953 million to 1,961 million hours (seasonally adjusted).

Kate Lamb, ABS head of labour statistics, said: “Although the unemployment rate increased by 0.1 percentage point in each of the past two months, the record high participation rate and near record high employment-to-population ratio shows that there continues to be a high number of people in jobs, and looking for and finding jobs.

“While unemployment increased to 637,000 people in July, the highest it has been since November 2021, it remains around 70,000 people below its pre-pandemic level.”

Bendigo Bank’s chief economist David Robertson said the next few reads on employment will be important for official interest rates and “where the Reserve Bank of Australia (RBA) are in the transition to an easing cycle compared to other central banks”.

“While our labour markets have been more resilient than elsewhere, any fall in our jobless rate from here would add to the risk of another RBA hike. To put minds at ease, we don’t expect this to occur, and any move prior to November and the next quarterly inflation data is highly unlikely,” Robertson said.

“Conversely, the case for an RBA cut (while still tenuous in our view) would be heightened by a sudden jump in our unemployment rate or any dislocation in global markets.

“So, while the recent selloff in equities is currently being described as a correction and not a bubble, stability in the markets is a key consideration for central banks.”

APAC economist at Indeed, Callam Pickering, said that the key question from these figures is whether the RBA will “place more weight on the very strong employment figures or the continued rise in the unemployment rate”.

“The former provides an argument for tighter rates, with employment growth supporting domestic demand, whereas the latter typically points to a weaker economy,” Pickering said.

“Our view is that there probably wasn’t enough in the latest labour force figures to sway Reserve Bank thinking in either direction. Plenty of trends to keep an eye on though.”

[RELATED: June Labour Force print ‘positive news for the RBA’]

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.

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