The jobless rate edged higher to a seasonally adjusted 5.3 per cent in August, bolstering the case for another Reserve Bank rate cut as soon as next month.
A surge in people with part-time work boosted net employment by 34,700 to 12.93 million during the month, according to Thursday’s data from the Australian Bureau of Statistics, but underemployment ticked higher on a 15,500 decrease in people with full-time work.
Most economists had expected the unemployment rate to remain unchanged at 5.2 per cent for a fifth consecutive month, despite dual rate cuts by the Reserve Bank and government tax stimulus supposedly initiated to counter jobs market slack, low wages growth, and low household consumption levels.
The participation rate also continues to climb, edging up to a new record high of 66.2 per cent during the month, indicating the demand for labour is being met with increased supply.
BIS Oxford Economics senior economist Sean Langcake said this was keeping a firm lid on wages growth.
“While today’s move is only a small one, it does provide further evidence that the labour market may be losing some momentum, Mr Langcake said on Thursday.
Unemployment was 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, with a third cut to 0.75 per cent already completely priced in by the market for November.
The RBA has indicated it will cut again if needed, but has repeatedly called on government to pitch in if it is to hit its long-term jobless goal of 4.5 per cent.
Economists widely expect the RBA to cut rates once more this year – in either October or November – with a further cut to 0.5 per cent predicted early in the new year.
ANZ economist Felicity Emmett said Thursday’s result should be enough to prompt another 25 percentage point cut next month.
Callam Pickering, APAC economist at Indeed, said conditions would likely get worse before the labour market improves, especially after the economy recorded its softest growth since the global financial crisis during the June quarter
“There is also a growing divergence between employment growth and growth in hours worked,” Mr Pickering said.
“That suggests that while the economy is still creating jobs it isn’t necessarily creating the same quality of jobs as it was a year or two ago.”
The number of unemployed people increased by 4,100 to 716,800 during August, and the monthly underutilisation rate increased by 0.1 points to 13.8 per cent.
Total monthly hours worked increased by 3.9 million to 1.782 billion.
The seasonally adjusted unemployment rate increased by 0.4 points in both South Australia, to 7.3 per cent, and Tasmania, to 6.4 per cent, and by 0.1 points in Victoria to 4.9 per cent.
Decreases were recorded in New South Wales, down 0.2 points to 4.3 per cent, and Western Australia, down 0.1 points to 5.8 per cent, with Queensland recording no change.
The Australian dollar dropped from 68.10 US cents just before the data’s release to a two-week low of 67.89 US cents.