Strong jobs data opens path for rate hikes

The official ABS labour force survey continues to defy nearly every other labour market measure, recording strong employment growth of 50,200 in June and a solid 0.8% rise in hours worked:

Source: Alex Joiner

The number of jobs added was more than double economists’ estimates of 20,000.

However, the official unemployment rate rose slightly to 4.1% (from 4.0% in May) due to a commensurate rise in the participation rate.

By contrast, the official underemployment rate fell by 0.3% to 6.5%.

In short, there is nothing here to stop the RBA from hiking rates at its next monetary policy meeting in early August.

All eyes now turn to the all-important Q2 CPI print on 31 July. If Q2 CPI comes in hot, the RBA will likely hike. If not, it will remain on hold.