The addition of 41,000 people to Australia’s workforce failed to shift the jobless rate in July, with unemployment remaining at seasonally adjusted 5.2 per cent for a fourth consecutive month.
The number of people employed rose to 12.91 million in July, according to Thursday’s data from the Australian Bureau of Statistics, including a better-than-expected 35,500 increase in people with full-time work and a 6,700 increase in people with part-time work.
But few inroads have been made into labour market slack, with underemployment rising 0.2 basis points to 8.4 per cent, suggesting more part-time workers want longer hours of work.
Economists had expected the jobless rate to remain unchanged amid subdued wages, low household consumption and spare capacity, which now appears bigger than previously thought.
NAB economist Kaixin Owyong said it was clear further economic stimulus was needed from the Reserve Bank and said another rate cut to 0.75 per cent could be expected by November.
“While the ongoing strength in employment will be reassuring for the RBA, these data suggest that spare capacity remains in the labour market,” Ms Owyong said.
Thursday’s figures follow hot on the heels of stagnant June quarter wage figures, which on Wednesday showed year-on-year wages growth was stuck in a range of 2.3 per cent and 2.4 per cent for a fourth consecutive quarter.
In particular, private sector wages continued to drag during the quarter.
BIS Oxford economist Sarah Hunter said sustained strong jobs growth would be needed to help boost employees’ pay packets.
“Labour supply has easily responded to the strong growth in demand from firms over the last two years and there are no signs yet of a general shortage of workers,” Dr Hunter said.
Unemployment has been the key metric cited by the RBA in its decision to cut rates in both June and July to a record low 1.0 per cent.
A third cut to 0.75 per cent is almost completely priced in for October, while a reduction to 0.50 per cent is likely by February.
But CommSec chief economist Craig James instead suggested a greater use of fiscal policy, rather than rate cuts, would be necessary to make further inroads into unemployment outside the country’s largest states.
While the jobless rate remains below 5.0 per cent in NSW, Victoria, Northern Territory and the ACT, it was at 5.9 per cent or above in each of Western Australia, Tasmania, Queensland and South Australia.
The national unemployment rate remains unchanged despite the number people with jobs increasing for the 33rd time in 34 months – following a revised 2,400 fall in jobs in June.
Callam Pickering, APAC economist at jobs site Indeed, said this jobs figure over the past two years would have usually led to a large decline in the unemployment rate.
“(But) these are not normal times … high population growth and rising participation has instead put upward pressure on measures of unemployment,” Mr Pickering said.
The participation rate increased 0.1 points to 66.1 per cent for the month.
Seasonally adjusted monthly hours worked in all jobs increased by 8.8 million hours – 0.5 per cent – in July to 1.78 billion hours.
Total unemployment increased by 800 people to 712,900.
The Australian dollar spiked from 67.55 US cents to 67.77 US cents immediately after the data’s release and was buying 67.84 US cents at 1250 AEST.