- The Australian Unemployment Rate is expected to remain steady at 4.1% in June.
- Australia is expected to have added 20,000 new job positions in the month after losing 2,500 in May.
- AUD/USD gains downward traction around 0.6500, aims for lower lows.
Australia is set to release the June employment report on Thursday at 1:30 GMT. The Australian Bureau of Statistics (ABS) is expected to announce that the country added 20,000 new job positions in the month, reversing the 2,500 lost positions announced in May. The Unemployment Rate is foreseen steady at 4.1%, while the Participation Rate is also expected to remain unchanged at 67%. Ahead of the announcement, the Australian Dollar (AUD) is under strong selling pressure amid fears dominating financial boards.
Australian ABS reports both full-time and part-time positions through the monthly Employment Change. Generally speaking, full-time jobs imply working 38 hours per week or more and usually include additional benefits, but they mostly represent consistent income. On the other hand, part-time employment generally means higher hourly rates but lacks consistency and benefits. That’s why the economy prefers full-time jobs.
The 2,500 jobs lost in May were less concerning than the crude number, as, over the month, the country managed to add 38,700 full-time jobs while losing 41,200 part-time positions. At the end of the day, full-time jobs weigh more than part-time ones when it comes to measure the labor sector health.
Australian unemployment rate expected to hold steady in June
Market analysts anticipate the Australian Unemployment Rate will remain at 4.1%. It has been stable around that level for almost a year, dropping to 4% a couple of months early in 2025, but overall steady, a relief for policymakers.
The Reserve Bank of Australia (RBA) has been cautious when it comes to trimming interest rates and has been among the latest major economies to abandon the tightening monetary policy cycle. Easing inflationary pressures and tepid growth supported the decision, yet the labor market has remained tight.
The RBA Board met earlier in July and decided to maintain the Official Cash Rate (OCR) unchanged at 3.85%, against market bets of a 25 bps cut, citing elevated uncertainty among the reasons behind the decision. On a positive note, officials acknowledged “that the most extreme outcomes are likely to be avoided.”
Regarding the employment situation, the Monetary Policy Statement shows: “Various indicators suggest that labour market conditions remain tight. Measures of labour underutilisation are at relatively low rates, and business surveys and liaison suggest that availability of labour is still a constraint for a range of employers. Looking through quarterly volatility, wages growth has softened from its peak, but productivity growth has not picked up, and growth in unit labour costs remains high.”
With that in mind, tepid job creation could accelerate the loosening of monetary policy. The decline in part-time jobs, however, is not as bad news as it could be in full-time ones.
Governor Michele Bullock spoke following the July decision. She said that it is appropriate for the Board to have a cautious, gradual stance on easing, adding the effects of the 50 bps cut delivered this year still had to “flow through.” She also noted that the Board is confident on a path to ease further, leaving the door open for another 25 bps cut before year-end.
With that in mind, an employment report in line with expectations would have no actual impact on the AUD. Signs of a strengthening labour market could further delay potential interest rate cuts and benefit the Aussie, while the opposite scenario is also valid.
When will the Australian employment report be released, and how could it affect AUD/USD?
The ABS June report will be released early on Thursday, and the Australian economy is expected to have added 20,000 new job positions in the month, while the Unemployment Rate is foreseen steady at 4.1% and the Participation Rate at 67%.
Ahead of the announcement, the AUD/USD pair battles to retain the 0.6500 mark amid a risk-averse environment, benefiting the USD. Valeria Bednarik, Chief Analyst at FXStreet, notes: “The AUD/USD pair has scope to extend its slide, according to intraday technical readings, as it is accelerating its slump below all its moving averages in the 4-hour chart. Even further, technical indicators accelerated south, with room to extend their declines before reaching oversold conditions.”
Bednarik adds: “The 0.6480 area comes as immediate support, as the pair bottomed around earlier in July. Further declines expose the 0.6430 region, en route to the 0.6400 mark. AUD/USD would need to recover above 0.6520 to shrug off the negative stance, with additional gains exposing the 0.6570 area.”
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
Economic Indicator
Unemployment Rate s.a.
The Unemployment Rate, released by the Australian Bureau of Statistics, is the number of unemployed workers divided by the total civilian labor force, expressed as a percentage. If the rate increases, it indicates a lack of expansion within the Australian labor market and a weakness within the Australian economy. A decrease in the figure is seen as bullish for the Australian Dollar (AUD), while an increase is seen as bearish.
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