Jobless rate stays steady

RBA’s cuts yet to stimulate employment market

THE unemployment rate remained at a seasonally adjusted 5.2 per cent in June as an election-related jobs boost receded and the effect of rate cuts was yet to materialise.

The number of people employed rose by a net 500 to 12.87 million during the month, according to data released yesterday by the Australian Bureau of Statistics, with a 21,100 increase in people with fulltime work offsetting a 20,600 decrease in part-time workers.

The participation rate remained steady at 66 per cent, and underemployment fell from 8.6 per cent to 8.2 per cent thanks to the boost in fulltime work.

Analysts expected the overall jobless rate to remain steady in the first read on the labour market since the Reserve Bank of Australia, under Governor Phillip Lowe (pictured), cut rates.

BIS Oxford economist Sean Langcake said the RBA would look for further employment growth in the coming months, and for the unemployment and underemployment rates to go down, which would ultimately encourage wage growth.

“With people continuing to enter the labour market and/or seek more hours than they currently work, there is very little supply-side pressure on wages,” Mr Langcake said.

“And with labour productivity falling, firms cannot sustainably increase wages for workers without reducing their profit margins.”

NAB economist Kaixin Owyong noted the third consecutive 5.2 per cent monthly unemployment result meant the RBA would have to lift its unemployment rate forecast.

“Although we don’t think that will prompt an immediate third rate cut,” she said.

“Barring a surprisingly weak inflation print in two weeks, we continue to forecast another rate cut ... in November, albeit with risk of an earlier move.”

The Reserve Bank has left the door open for a third rate cut by Christmas to 0.75 per cent as it seeks to eat into spare capacity and stimulate economic growth.

In seasonally adjusted terms, the largest decrease in employment numbers for June came in NSW, down by 17,400, followed by Queensland (down 8200), South Australia (down 4700) and Victoria (down 4100).

The only monthly increase was a 13,800 rise in Western Australia.

The ACT retains the nation’s lowest unemployment rate with 3.4 per cent, followed by NSW at 4.5 per cent, the Northern Territory with 4.6 per cent and Victoria with 4.7 per cent.