Australian jobs surge 76,300 in June, cementing bets on RBA rate rise

Australian employment surged by 76,300 in June, more than five times the 15,300 consensus estimate, as the participation rate hit a one-year high and the jobless rate held steady at 4.4 percent, data from the Australian Bureau of Statistics showed Thursday.

"The RBA's key concern will be that this tightness feeds into wage growth and, more broadly, into inflation in an economy where price pressures are already uncomfortably high — especially with crude oil up 26 percent this month," said Tony Sycamore, an analyst at IG.

Net employment rose by the most since April last year, lifting the annual pace of job gains to 1.7 percent from 1 percent. The participation rate climbed to 67 percent from 66.7 percent, driven by older Australians, with the 55-64 age group posting the largest annual increase — up 0.8 percentage points to 70.6 percent. Hours worked edged up 0.2 percent after sliding in May, though underemployment rose to 6.5 percent, the highest since August 2024, signaling slack beneath the headline strength.

The Reserve Bank of Australia has raised interest rates three times this year to 4.35 percent, fully reversing the easing delivered in 2025, as it fights to return inflation to its 2-3 percent target. Consumer inflation accelerated to an annual rate of 4 percent in May, with underlying inflation at 3.6 percent. The RBA's May outlook projected underlying inflation would remain above 3 percent until mid-2027, as fuel-related cost increases pass through to consumer prices. Brent crude futures have surged above $95 a barrel, up 26 percent this month alone, as the Middle East conflict threatens supply through the Strait of Hormuz.

Rate Path Tightens

Markets now price a 33 percent probability of a rate rise at the RBA's August 11 meeting, up from near zero before the data, with a move by year-end fully priced at 97 percent, compared with 78 percent previously. The Australian dollar rose 0.3 percent to $0.7020, while three-year government bond futures fell 5 ticks to 95.4, the lowest since early June.

"Australia's labour market is determined not to give the RBA the breathing room it needs," said Cameron McCormack, a senior portfolio manager at VanEck. "With the economy close to full employment, the RBA has greater freedom to focus squarely on inflation without a cooling in the labour market."

The June quarter inflation figures, due next Wednesday, will provide the RBA board with its final major data point before the August decision. The combination of a resilient labor market and rising energy costs leaves the central bank with little room to hold steady if inflation prints hot.

This article is for informational purposes only and does not constitute investment advice.