Australia's Jobless Rate Hits Five-Year High as RBA Hikes Loom

Australia's jobless rate has unexpectedly risen to a five-year high in August, despite a solid rebound in employment. The Australian Bureau of Statistics reported that net employment rose 39,500 in August from July, driven entirely by part-time roles.

The jobless rate increased to 4.6%, above forecasts for a steady 4.5% and the highest level since late 2021. This was largely due to an influx of people into the labour force, which rose 67,700 in August, up 2.1% from a year earlier.

However, inflation pressures extend beyond the labour market, with oil prices above $100 a barrel and trimmed mean inflation stuck at 3.6%. According to Oxford Economics Australia's Oscar Guth, 'Employment growth failed to keep pace with the influx of people into the labour force in August, easing some of the tightness in the labour market.'

The Reserve Bank of Australia (RBA) is still expected to raise interest rates next Tuesday to 4.6%, despite the mixed report. Governor Michele Bullock has said that unemployment in a range of 4.5% to 5.0% could help restrain inflation, suggesting some rise might be needed from here.