Australia's unemployment rate held at 4.4% in June following the strongest rise in employment in over 12 months. Employment surged by 76.3k - well above the expected increase of 15k - helping to absorb a sharp jump in labour force participation (67%). The report boosted pricing for an RBA rate hike in August from around a 1 in 5 to a 1 in 3 chance; however, the unemployment rate is actually rising slightly faster than forecast by the RBA, while broader measures indicate that labour market conditions may not be as tight as it previously assessed.
Employment rose by a well above consensus 76.3k in June, its strongest increase since the 104k surge in April last year. Both major segments contributed: part time up 47k (now up 83.9k over the past two months) and full time 29.3k. The ABS noted in today's release that a large number of people who were waiting to start in work in May was a factor in the upside result.
In addition to the June numbers, backward revisions were positive, with employment in May lifted to 44k (from 40.3k previously) while the decline in April was reduced to 38.6k (from -40.7k). Taken together, employment increased by 81.7k or 0.6% in the quarter, its strongest rise since Q3 2024. The 3-month average for employment gains jumped to 27.2k having slowed to just 8.6k in May. Through the first half of the year, employment increased on average by 26.9k per month. Volatility from one month to the next has been elevated but momentum in the latest quarter and for the year to date suggests employment is rising at a solid pace.
The sharp rise in employment helped to absorb a very large increase in the labour force (89.1k) in June as the participation rate rose from 66.7% to 67%, a 10-month high. This saw the unemployment rate hold at 4.4% in June. While this was in line with its average for the quarter as a whole, it rose from 4.2% in the March quarter. This also sees unemployment tracking slightly above the RBA's forecast trajectory (4.2%). Additionally, upward revisions to prior months and increases in June lifted the broader underemployment rate to 6.5% and total underutilisation to 10.9%, their highest levels since August 2024 and December 2021 respectively.
Rounding out the report, hours worked again surprised rising by only 0.2% in the month, underperforming the increase in employment (0.5%). However, the two were closer in sync across the quarter, with hours worked up 0.5% to go alongside the 0.6% rise in employment.
