Economists are expecting Australia’s unemployment rate to have risen slightly in June, while total employment growth remained flat, as the strong jobs growth of previous months grinds to a halt.
In May, the Australian Bureau of Statistics reported an increase of 38,900 in total employment, while the unemployment rate rose to 5.1 per cent from 5.0 the previous month.
But with smaller data readings – such as the NAB business confidence survey and ANZ job advertisement series – showing a conservative tendency among employers, economists have predicted little growth for the June figures due for release on Thursday.
A survey of 17 economists showed most expected unemployment to rise to 5.2 per cent, with a forecast of flat growth in total employment, and a lower participation rate of 65.4 per cent (from 65.5 in May).
CommSec economist Savanth Sebastian said a flat result would show that previous growth had consolidated in June.
“We’ve had around 120,000 jobs created since the start of the year now, so the labour market has probably surprised most market expectations,” he said.
“There are signs: businesses seem to be holding onto existing staff, small businesses are still putting on some staff, but overall it’s still a patchy labour market.”
Weaker growth in other parts of the economy would begin to show in July’s numbers, Mr Sebastian said.
“Business conditions are at their weakest level in three years,” he said.
“There are signs that businesses are more willing to borrow in a lower interest rate environment, but I don’t think it’s going to filter through to this result.”
Macquarie senior economist Brian Redican said the Reserve Bank of Australia could revert back to an easing bias, if job numbers showed a weaker trend in both June and July.
“Given we’ve had two or three months of very good numbers, I don’t think they would be panicking after one month’s data,” he said.
“But certainly it would change the debate about the following month.”
The RBA elected to leave the cash rate steady at 3.5 per cent at its meeting on July 3, after cutting in the previous two months.
JP Morgan economist Tom Kennedy said while there was still a generally optimistic scenario for Australian jobs, there might be some rewinding from May’s strong figures.
“We think the labour market is very healthy at the moment, although the levels we’ve been posting over the past few months probably can’t be sustained for the rest of this year,” he said.
“We’ve also got some adjustments due to the high value of the Australian dollar, with a lot of people employed in trade-exposed sectors such as manufacturing, retailing and wholesaling – so they’re coping with lower export demand.”
