Reporter's view: 'Strange' jobs data but August rate meeting still live, economists say
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Reporter’s view: Economics correspondent Jennifer Duke writes: “Economists weren’t that surprised by the headline figure but the strong rise in full-time employment is a head scratcher.
"State Street Global Advisors suggests there’s potentially some problems with the seasonality with seasonally adjusted employment up 50,200 but non-seasonally adjusted measures contracting by 1700.
"But it's AMP’s Diana Mousina who has described the mood among analysts best, saying this was ‘another confusing jobs report’. One of the weird things keeping economists on their toes is that the leading indicators have long been indicating a slowing in jobs growth since 2022. Yet now in mid-2024, this has still yet to translate into the labour force data. As Mousina said, this is ‘strange’.
"Among the leading data sets suggesting a slowdown is imminent is CreditorWatch, whose chief economist Anneke Thompson thinks slowing business conditions means employment growth is due to ‘slow down considerably over the latter half of 2024 and in to 2025, pushing the unemployment rate up’.
"The big question for markets in the short-term, though, is what this all means for rates. GSFM investment strategist Stephen Miller remains unconvinced a rate rise will be off the cards without an unemployment rate of 4.3% or higher and a bigger than 25,000 fall in employment. This suggests a rate rise is still in play and a lot is hanging on the quarterly inflation data at the end of the month. Miller said that if the June quarter trimmed mean inflation is above 4% ‘it will be difficult to avoid a policy rate hike’.
"Betashares’ David Bassanese also thinks a rate rise may still be possible depending on the inflation data. Retail was up 0.6% in May, which surprised some onlookers, and Bassanese said this means ‘it promises to go down to the wire’ on the August rate decision as the RBA meets without yet needing to worry too much yet about the economy’s underlying strength.
"KPMG chief economist Brendan Rynne is expecting an upswing in the unemployment rate in the short-term, to 4.5% by the middle of next year.
"Rynne said it’s ‘well-recognised that the labour market lags the real economy’ and the economy is slowing and has been for some time. Maybe the weirdness in the data will come to an end soon."
Unemployment rate rises to 4.1% in June
The news: The unemployment rate lifted 0.1 percentage points to 4.1% in June.
The numbers: Employment rose by about 50,000 people over the month, however an extra 10,000 people were jobless compared to a fall of 9000 the month before.
Seasonally adjusted unemployment has ticked up from a low of 491,000 in October 2022 to 608,000 in this latest data set, but remains well below pre-pandemic levels.
The participation rate increased to 66.9% in June. Full-time roles made up the bulk of the additional jobs over the month.
The context: The Reserve Bank has been trying to hold onto gains in the labour market while fighting inflation, but is expecting the rate to lift. A weaker than expected jobs market potentially suggests a higher likelihood of a rate cut.
The market consensus was for an increase in employment of 20,000 to 25,000 leaving the unemployment rate between 4% and 4.1%, compared to 4% in May. Alongside the upcoming quarterly inflation figures this has been the most awaited data point ahead of the RBA's August rate meeting.
What they said: "The employment-to-population ratio and participation rate both continue to be near their 2023 highs. This, along with the continued high level of job vacancies, suggests the labour market remains relatively tight, despite the unemployment rate being above 4.0% since April," Australian Bureau of Statistics head of labour force data Bjorn Jarvis said.
The source: Australian Bureau of Statistics
