Australia Unemployment Rate Hits 4.6% Ahead of RBA Rate Decision
Synopsis
Australia’s unemployment rate has risen to 4.6% ahead of the RBA’s September 29 rate decision, with the latest labour data offering a mixed picture for inflation, borrowers and small businesses.
Australia’s unemployment rate rose to 4.6% in August, reaching its highest level in the post-COVID period and giving the Reserve Bank of Australia another important labour market reading before its September 29 rate decision.
The increase came even as the economy added 39,500 jobs, with the number of people looking for work rising faster than employment. The participation rate also climbed to 67.1%, close to its record high.
The latest Australia unemployment rate data shows a labour market that is starting to lose some heat, although it is not showing a sharp deterioration.
Full-time employment fell by 6,300 in August while part-time employment increased by 45,800. The number of unemployed people rose by 28,200 to 722,900.
Australia Unemployment Rate and the RBA Decision
The figures come just days before the RBA’s September 29 meeting. Governor Michele Bullock said earlier this week that unemployment between 4.5% and 5% would probably take enough heat out of the labour market to ease inflation pressure. The August reading now sits within that range.
However, the unemployment figure does not automatically point to a rate cut. The RBA has also been dealing with inflation that remains above its 2% to 3% target range. The central bank has already lifted the cash rate by 75 basis points this year to 4.35%.
What the Rate Decision Means for Small Businesses
For Australian small businesses, another 25-basis-point increase would mean higher borrowing costs for businesses with variable-rate loans, overdrafts and other forms of debt. It could also put pressure on cash flow at a time when weaker demand is becoming a concern.
A decision to hold rates at 4.35% would avoid another immediate increase in financing costs, but businesses would still be operating with borrowing costs well above the levels seen during the pandemic period.
The RBA will now weigh the softer labour market against continuing inflation pressure before announcing its decision on September 29.
Source: news.com.au
Vishal is an experienced Editor at Inspirepreneur Magazine with key interests in artificial intelligence, eCommerce, entrepreneurship, lifestyle and startup sector. Prior to joining Inspirepreneur, he was a Content Writer cum Correspondent at Siliconindia Magazine, where he worked on Company Profiles, Cover Stories, Executive Profiles, Feature Articles and Thought Leadership content.
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