Source : Perth Now news
Unemployment has risen to 4.6 per cent for the first time in almost five years just days after Reserve Bank governor Michele Bullock said the jobless level would have to climb to bring down inflation.
The jobless rate in August was the highest since November 2021, when Sydney and Melbourne were in COVID lockdown, and is at the edge of what economists regard as full employment, as 28,200 people last month lost their job and Australians worked 14 million fewer hours.
Victoria had the nation’s highest jobless rate of 5.2 per cent, followed by Tasmania on 5 per cent, South Australia on 4.6 per cent and the commodities-rich states of Queensland and Western Australia both on 4.5 per cent.
NSW had the lowest jobless rate of 4.3 per cent, despite being home to Sydney, Australia’s most expensive property market that is also experiencing the sharpest drop in house prices.
The Australian Bureau of Statistics data was released on Thursday, two days after Ms Bullock signalled higher unemployment was the price of bringing down inflation.
“So it might be, again, another difficult issue for the Reserve Bank in terms of this as another supply side thing, worsening the trade-off potentially between inflation and unemployment,” she said.
Australia’s most powerful central banker signalled the non-accelerating inflationary rate of unemployment – known as the NAIRU – was likely to be higher than thought, meaning more job losses as the RBA hiked interest rates to bring down inflation.
“In technical terms, the NAIRU might be higher for a while, which means that for any given inflation rate, we have to tolerate a higher unemployment rate.”
Inflation in July was above the RBA’s 2-3 per cent target for the 12th straight month and any further rise in unemployment would see the Reserve Bank simultaneously failing its dual mandates on price control and the labour market.
Australia’s big four banks are expecting the Reserve Bank to raise interest rates on Tuesday next week which would take the cash rate to a 15-year high of 4.6 per cent.
The futures market regards a hike as an 86 per cent chance.
More to come
