The Australian labour market exhibited remarkable growth in June, surpassing all expectations, according to data revealed on Thursday.
Unemployment in Australia remained steady at 3.5 per cent in June, according to the latest data released by the Australian Bureau of Statistics (ABS). The figures for May were also revised to reflect the same rate.
Bjorn Jarvis, the head of labour statistics at ABS, highlighted that around 33,000 people found employment during the period, while the number of unemployed individuals decreased by 11,000, contributing to the stable unemployment rate.
The employment-to-population ratio reached a record high of 64.5 per cent, indicating a tight labor market with employment growth aligning with population growth. Since March 2020, the percentage of the population aged 15 years or older who are employed increased by 2.1 percentage points, reaching 64.5 per cent in June 2023.
Although the participation rate experienced a slight decline of 0.1 percentage point, settling at 66.8 per cent compared to the previous month’s record high, there were differences in gender-specific trends. The participation rate for women decreased by 0.2 percentage points, reaching 62.5 per cent, while for men, it increased slightly by 0.1 percentage point, reaching 71.3 per cent.
In terms of working hours, there was a monthly increase of 0.3 per cent in June 2023, outpacing the growth in employment, which was at 0.2 per cent. Over the past year, total hours worked increased by 4.7 per cent, exceeding the rise in employment, which was at 3.0 per cent.
Anneke Thompson, a prominent analyst in the economic landscape, provided a comprehensive overview of the current state of the labor market in Australia. Although the unemployment rate has remained unchanged recently, Anneke predicts that the labor sector’s weakness may emerge in the latter half of 2023.
This forecast is influenced by the actions of major companies like Telstra, Lend Lease, and Westpac, which have announced redundancies as part of their restructuring efforts. As business conditions continue to weaken and profit margins shrink, companies are likely to scrutinize their headcounts, especially considering the substantial growth in employment numbers since the pandemic.
Anneke’s insights are further supported by the June Business Risk Index data, which indicates that businesses are displaying caution in their operations. The record number of Credit Enquiries performed by customers reveals that businesses are becoming less inclined to offer credit to customers with poor payment histories, highlighting the critical importance of cash flow in the current economic climate.
Given the prevailing uncertainties and challenges faced by the labor market and businesses, the current interest rate decision may not provide the Reserve Bank of Australia (RBA) with sufficient clarity ahead of their upcoming board meeting in August. The focus will now shift to next week’s monthly inflation figure, which is expected to play a crucial role in determining the RBA’s course of action. Anneke maintains her stance that another interest rate increase is likely at the August meeting.
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