RBA Hike Odds Unchanged Amid Mixed Labour Market Signals

Australia's labour market showed mixed signs in August, with employment growth exceeding expectations but the unemployment rate rising to a five-year high due to more people entering the workforce.

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%, the highest since November 2021. The participation rate increased to 67.1% from 66.9%. ANZ analysts described the data as mixed but said the broader signal was one of a labour market gradually easing.

The Reserve Bank of Australia is set to make a policy decision on September 29, and despite the unemployment rate rise, ANZ expects another 25-basis-point increase in November. RBA Governor Michele Bullock previously stated that unemployment may need to rise into a 4.5%-5% range to help restrain inflation.