Australia’s unemployment rate has risen to its highest point in almost four years and economists predict conditions will get worse for jobseekers.
The unemployment rate rose to 5.7 per cent in June – the highest it’s been since September 2009 – surpassing economists’ expectations of 5.6 per cent.
May’s figure was revised up to 5.6 per cent, from 5.5 per cent, the Australian Bureau of Statistics said on Thursday.
JP Morgan economist Ben Jarman said the figures showed the economy was gradually slowing down, adding only 10,300 jobs to accommodate the extra 34,000 people that wanted a job in June.
“We’re not creating enough jobs to absorb this rise in participation that’s going on,” Mr Jarman said.
“This is consistent with an economy that is slowing a bit below trend pace and as a result of that, the labour market is loosening a bit.
“But it all looks pretty gradual and orderly at this point so you’re not seeing deep cuts in the existing head count, all you’re really seeing is a bit more restraint in terms of hiring.
“We’re still adding jobs, just not enough.”
Mr Jarman said although unemployment was higher than expected, the gradually increasing unemployment rate was in line with forecasts of subdued economic activity and therefore would not spook the Reserve Bank.
He said most forecasters were tipping a rise in the unemployment rate to above six per cent.
HSBC chief economist Paul Bloxham said the economy was showing signs of modest growth, with a rise in the participation rate to 65.3 per cent, up from 65.2 per cent in May, a positive sign.
“The economy is not strong, but it is also not that weak – it is just OK,” Mr Bloxham said.
“(Job creation) has not been enough to soak up all entrants into the labour force – as population growth is picking up – but it is still a modest pace of employment growth.”
Mr Bloxham said there were gradual signs that Australia’s growth was rebalancing from the mining to the non-mining sectors, with employment this year picking up more in NSW and Victoria than the key mining state of Western Australia.
He said the jobs figures would give the RBA more room to cut rates in August.
Commonwealth Bank chief economist Michael Blythe said the rise in unemployment meant another interest rate cut in August was more likely, depending on June quarter inflation data, released on July 24.
“We’re seeing a gradual uptrend in unemployment coming through despite the fact we’re still generating jobs and, provided we get an on-the-money inflation reading in a week or so’s time, it looks like an August rate cut is a real possibility,” he said, adding that futures markets saw a rate cut next month as a 60 per cent chance.