Australia's Jobless Rate Climbs to 4.6% as More People Hunt for Work

Australia's unemployment rate rose to 4.6% in August, up from 4.5% in July, as more people joined the job market than found work, official figures showed Thursday.

The number of unemployed people increased by 28,200 to 722,900, according to the Australian Bureau of Statistics. Employment grew by 39,500 over the same month.

The result came in above forecasts. Economists had expected the rate to hold at 4.5%, with employment tipped to rise by 20,000.

Part-time gains, full-time losses

Part-time employment rose by 46,000 people in August, while full-time employment fell by 6,000. The unemployment rate for men rose to 4.8%, while the rate for women held at 4.4%.

ABS head of labour statistics Sean Crick said much of the rise came from people who had not previously been part of the workforce. The bureau recorded "a higher proportion of people who were previously not in the labour force" moving into unemployment than in recent years, he said.

That growth in the labour force lifted the participation rate from 66.9% to 67.1%. Underemployment, which counts workers who want more hours, eased to 6.2%.

Hours worked rose by 14 million in August, after falling by the same amount in July. Crick said the July drop was partly due to more employed people working zero hours than usual for that month.

Over the past year, employment has grown 1.6%, while the number of unemployed people has risen by 80,000, or 12.4%.

Bureau flags survey change

The ABS cautioned readers about its August figures. It has changed how a supplementary part of the Labour Force Survey is collected, and said removing an old adjustment could have an unintended effect on the seasonally adjusted numbers.

Its testing found any impact on monthly movements should be smaller than normal sampling variability, and the bureau judged the August data fit for purpose. It continues to recommend trend figures as the best guide to the labour market. The trend unemployment rate also rose marginally to 4.6%.

Rate decision next week

The data lands five days before the Reserve Bank of Australia's next interest rate decision. The RBA held the cash rate at 4.35% in August and announces its next decision on 29 September. The bank lifted rates three times earlier this year, in February, March and May.

Most major banks expect another increase. NAB, CBA and Westpac all forecast a 25 basis point rise to 4.60% at the September meeting, while ANZ expects a September hike followed by a second in November. Financial markets had priced in about a 90% chance of a September rise, according to CBA economists.

RBC's Robert Thompson, who switched his forecast after RBA officials appeared before a parliamentary committee last week, wrote that September "now seems all but a lock."

Not every signal points the same way. CBA said the economy is slowing, the labour market is moving closer to balance and the housing market is in a significant downturn. The bank has said it expects unemployment to grind higher over time, which it sees as necessary to bring inflation down.

The ABS is due to release August inflation data on 30 September, the day after the RBA meeting.

The bureau's September labour survey has already been collected, covering 30 August to 12 September.