Economists are cautious about an interest rate hike in August after the ABS revealed that unemployment has increased, and the participation rate has reached near record highs.

Economists are cautious about an interest rate rise in August after the Australian Bureau of Statistics (ABS) revealed that unemployment jumped to 4.1 percent, despite beating market expectations.

Seasonally adjusted figures showed that more than 50,000 new jobs were created in June, significantly higher than the expected 20,000.

The underemployment rate fell to 6.5 percent over the past month, while the number of hours worked hit 15 million, and the participation rate reached 66.9 percent, putting it near record highs.

Bjorn Jarvis, ABS head of labor statistics, said these figures pointed to “a tight labor market” but noted it was “less tight than in early 2023.” Diana Messina, the deputy chief economist at AMP, stated that based on this data alone, she did not expect the Reserve Bank of Australia (RBA) to hike rates, but upcoming inflation figures from the ABS at the end of this month could change that.

“The inflation figures have been surprising in Australia for the past three months, especially the underlying or trimmed mean data for Australia,” she told Sky News Australia’s Business Now.

“If we do see a higher read for the trimmed mean, then there is a risk the Reserve Bank will hike rates again because they’ve been indicating they’re still quite uncomfortable with the inflation outlook for Australia.”

When asked about the reaction from money markets to Thursday’s data, Ms. Messina indicated a significant jump.

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