Australia's unemployment rate holds at 4.4% as 76,000 jobs added

Australia's labour market continued to outperform expectations in June, with the unemployment rate holding steady at 4.4% even as the economy grapples with slowing growth, persistent inflation and elevated borrowing costs.

According to ABC, the economy created 76,000 jobs during the month, driven largely by a 47,000 increase in part-time employment. While the headline unemployment figure remained unchanged, the rise in part-time work pushed the underemployment rate up from 6.3% to 6.5%, indicating that more Australians are looking for additional hours of work. In trend terms, unemployment also remained at 4.4%.

The figures point to a labour market that remains remarkably resilient despite mounting economic pressures. However, economists warn that global uncertainty, including the potential fallout from renewed tensions in the Middle East, could begin to weigh on employment later this year.

"We expect the unemployment rate to rise to 4.6% by the end of the year," said Harry McAuley, economist for Oxford Economics Australia.

"However, a renewal of hostilities in the Strait of Hormuz presents a significant risk to the outlook."

More Australians are working, but many want more hours

The latest data also suggests more Australians are either entering or re-entering the workforce. 

The participation rate has climbed from 66.6% in November to 67% in June, reflecting a steady increase in labour supply over recent months.

Yet that stronger participation has been accompanied by a rise in underemployment, which has increased from 5.7% in December to 6.5% in June. 

The trend suggests that while jobs remain available, many workers are still unable to secure the number of hours they want.

David Bassanese, chief economist, BetaShares, pointed out two forces driving the higher participation rate, "It could be that the supply upturn is demand-led, with more Australians being enticed into work by still widely available job opportunities," he said.

"But it could also reflect cost-of-living pressures forcing more Australians into the workforce."

All eyes on inflation ahead of RBA meeting

Bassanese also noted, "Next week's June quarter consumer price index will 'make or break' the case for an August interest rate increase.”

Diana Mousina, deputy chief economist, AMP said, “"The Reserve Bank meets later in August and we expect another 0.25% rate hike, which would take the cash rate to 4.6%.”

"This view is mostly premised on an expectation that next week's June quarter inflation figures will show trimmed mean inflation that is just way too high, running at 3.8% over the year when the RBA is targeting 2.5%."

Despite signs that the labour market is gradually easing, economists believe it remains tight enough to keep the Reserve Bank of Australia cautious, particularly if wage growth and consumer spending remain resilient.