Get ready for more interest rate rises as unemployment falls despite the most severe Reserve Bank hikes since 1989
- Unemployment in May fell to 3.6 per cent
- This was despite aggressive rate increases
Australia’s unemployment rate has fallen despite the Reserve Bank hiking rates at the most aggressive pace since 1989.
The jobless level in May dropped to 3.6 per cent, down from April’s 3.7 per cent.
Last month, 75,900 new jobs were created, taking unemployment closer to March’s 48-year low of 3.5 per cent.
This occurred despite the Reserve Bank’s aggressive monetary policy tightening, which in June saw interest rates increased for the 12th time in 13 months to an 11-year high of 4.1 per cent.
The latest Australian Bureau of Statistics data has stirred fears of more interest rate rises amid fears a tighter labour market will add to inflationary pressures, following the arrival of 387,000 new migrants last year.
Australia’s unemployment rate has fallen despite the Reserve Bank hiking rates at the most aggressive pace since 1989 (pictured is a bartender in Bunbury south of Perth)
Borrowers are already grappling with the most severe pace of rate rises since 1989 with April’s inflation rate of 6.8 per cent more than double the RBA’s 2 to 3 per cent target.
More rate rises to curb inflation also increases the risk of a recession – something that hasn’t occurred in Australia since 1991 as a result of rate rises.
New ABS data released on Thursday also showed 387,000 new migrants moved to Australia in 2022, during a rental crisis.
Australia’s population growth pace of 1.9 per cent was also by far the highest in the developed world.
Strong population growth appears to be supporting economic activity with the labour market participation rate in May rising to 66.9 per cent.
The latest Australian Bureau of Statistics data has stirred fears of more interest rate rises amid fears a tighter labour market will add to inflationary pressures, following the arrival of 387,000 new migrants last year (pictured is Reserve Bank of Australia Governor Philip Lowe)
That meant there were 14,011,800 people in work, compared with just 515,900 who were unemployed.
Australia’s property market is already recovering, despite the rate rises, with CoreLogic data showing house prices increasing in every state and territory capital in May.
Sydney, where more migrants go to live, had the biggest increase of 2.1 per cent, taking the median house price to an even more unaffordable $1.294million.
Three of Australia’s big four banks – Commonwealth, Westpac and NAB – are expecting the RBA to increases rates again in July by another 0.25 percentage points, taking the cash rate to 4.35 per cent.
