The Labour Force data was released showing a headline unemployment rate of 6.3% (s.a) compared to June’s rate of 6.1% and May’s rate of 5.9%. The increase in the unemployment rate was despite a large 38.5k jobs created in the month – nearly four times the number the market was expecting and the highest July print on record. The rise raised questions yet again about the accuracy of the ABS’s numbers but it does appear in part to be caused by a rise in the number of people looking for work – the participation rate – which increased 64.8% to 65.1%. That said, the ranks of the unemployed are said to have grown by 40,000 which confused most observers. The market didn’t know what to make of the numbers with the AUD rocketing higher, then falling and finally settling around 20bps lower than before the announcement. Many commentators are of the view that the RBA will not cut rates again.
Ivan Colhoun from the NAB said “We’d discount the sharp rise in unemployment as the start of a new trend and instead conclude that the unemployment rate has been broadly stable at around the 6.1-6.2% mark”. Ben Jarman from JP Morgan called the result a “messy one” and Barclay’s Keiran Davies said the “growth in employment is somewhat overstated because the Bureau of Statistics hasn’t updated its population benchmarks… The RBA seems likely to lower its forecast peak in unemployment.”