Australia Jobless Rate Hits 4.5%, Weakening Labor Market Ahead of RBA Meeting

Australia's jobless rate rose to 4.5% in July, exceeding expectations and signaling a weaker-than-expected labor market ahead of the Reserve Bank of Australia's (RBA) September policy meeting.

The unemployment rate increased from 4.4% in June, while the participation rate remained at 66.9%, slightly below June's 67%. The decline in employment was unexpected, with a fall of 15,800 jobs in July, compared to forecasts for an 11,700 increase and reversing most of June's 76,300 gain.

The weakness in headline employment was partly offset by a 16,300 increase in part-time work, although that was well below the 29,300 gain recorded in June. The data suggests softer hiring momentum after a strong-than-expected June report.

The figures may strengthen expectations that the RBA will keep interest rates on hold at its September meeting, as policymakers have stressed that the labor market remains relatively tight and inflation is still elevated. IG senior markets analyst Tony Sycamore noted that a softer-than-expected number would reinforce the view that the labor market is loosening in line with the RBA's updated projections.