Australia’s labour market is showing signs of strength and strain as the unemployment rate rises amid strong job growth. In July, the unemployment rate increased slightly to 4.2%, the highest level since January 2022. This increase came despite the addition of 58,200 jobs, a figure nearly three times higher than economists’ expectations of 20,000 new positions.
Much of this job growth was primarily driven by full-time roles, with 60,500 positions added, while part-time employment saw a minor decline. The participation rate, which measures the proportion of working-age individuals in the labor force, hit a record high of 67.1%. This increase in labor force participation suggests a robust labor market where more individuals are actively seeking employment, contributing to the rise in the unemployment rate.
Despite the overall positive job growth, certain sectors of the economy are facing challenges. The number of unemployed people grew by 24,000 in July, and the competition for available jobs is intensifying. According to job advertising site Seek, some positions are attracting hundreds of applicants, particularly in lower-skilled roles. The number of job advertisements has fallen by more than 15% over the past year, indicating a tougher job market.
Several industries, including mining and media, have experienced significant job cuts. In July alone, major companies like BHP, Fortescue, and Albemarle announced thousands of layoffs. These job losses, coupled with the decline in advertised roles, suggest that the job market may become more competitive in the coming months.
Looking ahead, the RBA anticipates that the unemployment rate will rise to 4.3% by December, which it considers close to full employment. It is believed that as more people enter the workforce, this additional labor supply could help ease inflationary pressures, potentially allowing the RBA to cut rates in early 2025.
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