Labour Market Still “Very Tight”, August Hike On Cards

June employment came in stronger-than-expected but below the upper end of forecasts. The economy added 32.6k new jobs after an upwardly-revised 76.5k in May. The unemployment rate was steady at 3.5% after May was revised down from 3.6%. Full-time jobs and hours worked rose. As the labour market remains very tight, Q2 inflation due July 26 will likely need to be down significantly including services for another RBA pause in August.

• The May unemployment rate was revised down 0.004pp which rounded was to 3.5% from 3.6%. June was 0.08pp below May at 3.47% driven by jobs growth and a 10.9k drop in the number of unemployed. The participation rate fell 0.1pp to 66.8%.
• The trend of rising full-time (FT) jobs with falling part-time (PT) continued and along with the increase in hours worked is pointing to persistent labour shortages despite a 2.9% y/y increase in the labour force. FT employment rose 39.3k to be up 4% y/y and PT fell 6.8k to be up only 0.7% y/y. 3-month momentum remains robust for total and FT employment.
• Hours worked rose 0.3% m/m to be up 4.7% y/y, exceeding the growth in jobs at 3% y/y, as existing employees meet some of the demand. FT hours rose 0.8% m/m & 5.6% y/y while PT fell 2% m/m to be up only 0.4% y/y. Weaker PT hours may reflect the increase in the underemployment rate from its February trough. In June it was stable at 6.4%, which while low historically, is up from the 5.8% low.
• The growth in population over 15yrs continued to rise to new historical highs at 2.8% y/y up from 2.7%. The employment-to-population ratio remained at the record 64.5%.

Source: MNI - Market News/ABS