In June, Australia’s unemployment rate fell to a 48-year low as hiring exceeded all forecasts.
But record vacancies showed the labor market was destined to tighten much more, thus justifying even higher hikes in interest rates.
The Australian Bureau of Statistics reported on Thursday that net employment increased by 88,400 in June, compared to 60,600 in May. This exceeded market expectations of a 30,000 increase in June, bringing the year’s advances to a roaring 438,000.
The unemployment rate fell to 3.5 percent from 3.9 percent, significantly below the 3.8 percent projection and the lowest since August 1974.
The drop occurred even as more individuals sought employment, with participation reaching a record high of 66.8 percent.
The underutilisation rate, which combines unemployment and underemployment, remained at 9.6 percent, the lowest since 1982, implying that pay growth will rise over time.
Unemployment declined by an abnormally substantial 54,300, although layoffs were minimal.
With the economy approaching full employment and inflation running high, the Reserve Bank of Australia (RBA) is expected to keep raising interest rates after last week’s half-point increase to 1.35 percent.
Markets fully anticipate another 50 basis points in August, with some even speculating about a more radical move if upcoming inflation data surprises to the upside, as it has internationally.
An eye-watering 9.1 percent June data on US consumer prices has markets betting the Fed will rise by a full percentage point, while the Bank of Canada did exactly that on Wednesday.
Australia’s consumer price report for the second quarter is expected on July 27, and economists had already predicted that inflation would reach 6.3 percent, the most since 1990, with worse to come before the year closes.