Australian unemployment rises to 4.6% ahead of expected RBA

Australia's unemployment rate rose to 4.6% in August, up from 4.5% the previous month. The Australian Bureau of Statistics data marks the highest jobless figure since the pandemic period.

Analysts had expected the rate to hold steady. The unexpected increase is not predicted to deter the Reserve Bank of Australia from implementing a fourth consecutive interest rate hike at its meeting next Tuesday.

Labour market details show shift to part-time work

The August labour force data revealed a complex picture. Total employment grew by 39,000 people. This growth, however, was driven entirely by a surge in part-time work, which offset a loss of 6,000 full-time positions.

The rise in the unemployment rate occurred alongside the employment increase because more people entered the workforce to look for jobs. KPMG's chief economist, Brendan Rynne, said this indicates households are seeking more income.

"This suggests households are scrambling to find more income to help cover their rising day-to-day expenses and future increases in mortgage payments," Rynne said.

Multiple job holders hit record high

Separate data from the ABS, cited in the Guardian report, shows the scale of this scramble. Earlier this month, the number of Australians working more than one job surpassed 1 million for the first time.

The proportion of employed people with multiple jobs reached a record 6.9%. This is approximately one percentage point higher than before the inflationary period that began in 2022.

Ryan Wells, a Westpac economist, explained the dynamic. He said cost-of-living pressures and interest rate rises are encouraging more people into the labour market, even as the economy softens.

Central bank poised for further tightening

The Reserve Bank's cash rate currently stands at 4.35%. Financial markets and experts widely expect a 0.25 percentage point increase next week, which would lift the rate to 4.6% - its highest level in nearly 15 years.

Central bank officials have recently warned that inflation, currently at 3.5%, remains too high. They have indicated it is not tracking lower as hoped. Further pressure comes from higher fuel costs linked to the ongoing US-Israel war on Iran, raising the chance of another rate hike later in the year.

Economist Brendan Rynne said the labour data reaffirms a weakening economy. He pointed to the participation rate rising to just below its all-time peak of 67.2% as evidence of household strain. The data paints a picture of an economy where job growth is becoming more precarious even as financial necessity drives more people to seek work.