Solid jobs data dims hopes of early RBA rate cut

Australia's labour market remained resilient in June, with the unemployment rate unchanged at 4.4% and employment rising by 76,000 people, figures that are likely to weigh on the Reserve Bank of Australia's next interest rate decision.

The data, published by the Australian Bureau of Statistics (ABS) on Thursday, showed the participation rate rising 0.3 percentage points to 67%, reinforcing a picture of labour market strength that sits uneasily with expectations of near-term rate relief.

"In June, we recorded a 76,000 person rise in employment, driven by a 47,000 person rise in part-time employment," said Sean Crick, ABS head of labour statistics. "Part of the growth in employment this month came from those who were waiting to start a job in May. This represents a stronger June movement than has been observed in recent years.

"We also continued to see higher numbers of people remaining employed this June, following elevated levels in the recent few months. The number of unemployed rose by 13,000 people in June, which combined with the growth in employment, led to the participation rate rising in June."

The RBA has cited labour market conditions as a key input to its rate-setting deliberations, and a tight jobs market can sustain inflationary pressure — reducing the likelihood of near-term cuts to the cash rate.

Economists and major lenders remain divided on the RBA's next move. Westpac continues to forecast two further cash rate increases — one at the August meeting and a potential second in September — while CBA, NAB, and ANZ hold the view that the cash rate has already peaked. All four major banks, however, expect the RBA to begin cutting rates next year. For borrowers on variable mortgages, that split in forecasts means the timing of any repayment relief remains uncertain.

Meanwhile, the underemployment rate rose 0.2 percentage points to 6.5% in June, while hours worked increased 0.2% over the month. On an annual basis, employment was up 1.7% from June 2025 and hours worked grew 1.8% — both indicators pointing to an economy that has not yet softened sufficiently to prompt aggressive monetary easing.

Workers aged 55 to 64 posted the largest annual gain in labour force participation, with their rate up 0.8 percentage points to 70.6% — a demographic shift that further supports aggregate labour supply.

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