Australia Unemployment Hits Five-Year High Despite Strong Employment Growth

Australia's labour market showed mixed signs in August, with employment growth exceeding expectations but the unemployment rate rising to a five-year high. The Australian Bureau of Statistics reported that employment rose by 39,500 in August, compared to a 21,500 increase expected by economists and a 15,900 decline in July.

The increase was driven by a 45,600 rise in part-time employment, while full-time employment fell by 6,300. The unemployment rate rose to 4.6% from 4.5%, compared with economists' expectations for it to remain at 4.5%. This reading was the highest since November 2021.

The labour force participation rate increased to 67.1% from 66.9%, indicating that a higher proportion of people who had previously been outside the labour force moved into unemployment in August than in recent years. ANZ analysts described the data as mixed but said the broader signal was one of a labour market gradually easing.

The figures come ahead of the Reserve Bank of Australia's policy decision on September 29, where the central bank has raised its cash rate by 75 basis points this year to 4.35%. Despite the unemployment rate hitting a five-year high, ANZ analysts do not expect the data to alter their call for the RBA to raise its cash rate by 25 basis points at its meeting.