Jobless Rate Rise Complicates Interest Rate Outlook Ahead of RBA Meeting

The Australian unemployment rate has increased to 4.6 percent, despite a rise in the number of people in work. The national jobless rate rose by 0.1 percentage point last month, according to data from the Australian Bureau of Statistics.

Although more people found employment, with an additional 45,800 entering part-time work and monthly hours worked increasing by 0.7 percent, the number of people entering the workforce is growing faster than ever before. This pushed the participation rate up to 67.1 percent, just shy of its all-time high.

Experts are divided on what this means for interest rates. BDO chief economist Anders Magnusson believes that while the latest employment update weakens the case for a September rate hike, he still expects the Reserve Bank of Australia to lift the official cash rate to 4.6 percent next week.

KPMG chief economist Brendan Rynne disagrees, saying that the labour market may be even weaker than the August figures show. He points out that all the growth in employment last month was in part-time work, and that the high participation rate suggests families are struggling to make ends meet.