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News.com.au
13 minutes ago
- News.com.au
Employment rises by 2,000 but jobless rate jumps, sending Aussie dollar plunging
The Australian dollar has slumped and the money markets are calling a 100 per cent chance of a rate cut after new data revealed a shock fall in the employment rate. The unemployment rate rose to 4.3 per cent last month, beating market expectations of 4.1 per cent, according to the Australian Bureau of Statistics. Employment as a whole rose by 2000 people this month, following a fall of 1000 in May, and is up 2 per cent year on year. The rise in unemployment was determined as 33,600 workers became unemployed in June. This was against expectations of 20,000 jobs to be added in the month and the unemployment rate to hold. Markets immediately jumped on the news, with investors now banking on a future rate cut. With expectations of lower rates, the Australian dollar slumped back below 65 US cents, while Australia's sharemarket jumped on the news. IG market analyst Tony Sycamore said the bond market was quick to react to Thursday's data, moving up expectations of a rate cut from 80 to 100 per cent in August. 'Today's rise in the unemployment rate pushes it above the RBA's forecast of 4.2 per cent for June 2025 and meets the 4.3 per cent rate the RBA expected by year-end,' he said. 'Combined with last month's fall in employment, there are clear signs of deceleration emerging in the labour market. 'This calls into question the RBA's decision to prioritise inflation over growth and jobs at its board meeting earlier this month. Betashare chief economist David Bassanese, who called a hold in July, said Thursday's unemployment data was a 'slam dunk' for an August rate cut. 'We'll need more consistent signs of weakness in both employment and hiring indicators before we can conclude the labour market is turning,' he wrote in an economic note. 'That said, today's result clearly adds to the case for a RBA rate cut at the August policy meeting provided next week's Q2 CPI report is not a shocker.' With the unemployment rate lurching higher, growth at subpar levels, and inflation back within the RBA's target band, the RBA will no doubt be keen to make amends at its meeting in August. The underemployment rate also increased to 6 per cent, as 40,200 part-time roles were created and 38,200 full-time roles were lost from the job market. The employment-to-population ratio remained at 64.2 per cent, and the participation rate, being people who are actively working, rose to 67.1 per cent. Hours worked fell 0.9 per cent in June, following a rise of 1.4 per cent in May. ABS head of labour statistics Sean Crick said: 'This month we saw a decrease in full-time hours worked, down 1.3 per cent, associated with a 0.4 per cent fall in full-time employees.' Prior to Thursday's figures, experts had tipped the unemployment rate to remain at 4.1 per cent, although they did predict a tightening of the jobs market. The Reserve Bank of Australia will be watching the jobless rate ahead of its next meeting, having the dual mandate of employment and controlling inflation. 'I think the focus for the RBA will be ensuring the labour market remains healthy going forward,' NAB's head of Australian economics Gareth Spence said. 'The timing of cuts is not super important. 'It's more about where do they end up.' In a move that shocked markets and disappointed homeowners, the RBA kept the official cash rate at 3.85 per cent during its July 8 meeting.


Perth Now
34 minutes ago
- Perth Now
Stocks drift before tech earnings, Fed drama confounds
Asian stocks dithered ahead of earnings from heavyweight technology companies and as market anxiety lingered over the uncertain tenure of Federal Reserve chief Jerome Powell. TSMC, the world's main producer of advanced AI chips, is expected to post a jump in second-quarter profit to record levels, though US tariffs and a strong Taiwan dollar could weigh on its outlook. Profits for streaming giant Netflix , due later on Thursday, are also on investors' radar. "With Netflix having outperformed the S&P 500 year-to-date by a sizeable 33 percentage points, and the street fully subscribed to the bullish investment case, Netflix will need to blow the lights out with a solid beat and raise," said Chris Weston, head of research at Pepperstone. MSCI's broadest index of Asia-Pacific shares outside Japan was up just 0.06 per cent and the Nikkei slipped 0.24per cent. Canadian retailer Alimentation Couche-Tard said on Wednesday it was withdrawing its $US47 billion ($A72 billion) takeover bid for Seven & i Holdings, citing a lack of constructive engagement by the Japanese retailer. European futures jumped as EUROSTOXX 50 futures rose 0.56 per cent and FTSE and DAX futures added about 0.4per cent each. Nasdaq futures and S&P 500 futures fell 0.1 per cent each. Also dominating the market mood was confusion over Fed Chair Powell's future at the US central bank, after initial news that US President Donald Trump was likely to fire Powell soon sent stocks and the dollar sliding. Trump was quick to deny the reports, restoring some calm to volatile markets, but he kept the door open to the possibility and renewed his criticism of the central bank chief for not lowering interest rates. "I think the most likely outcome is for Powell to stay on until the end of his term next year. Having said that, this is not the first time, so there are going to be episodes of volatility in the dollar as a result of political noise," said Carlos Casanova, UBP's senior economist for Asia. The dollar was on a fragile footing on Thursday, after having lost ground overnight on worries that the Fed's independence could come under threat. The euro was last down 0.17 per cent at $1.1620 while sterling eased 0.13 per cent to $1.3400 after both currencies made gains in the previous session. The dollar was little changed at 98.49 against a basket of currencies, having lost 0.33 per cent overnight. US Treasury yields also steadied after falling on Wednesday, due to expectations that Powell's removal could lead to quicker and deeper rate cuts, with the two-year yield last at 3.9022 per cent. The benchmark 10-year yield was little changed at 4.4673 per cent. In Japan, yields on government bonds rose on Thursday as investors extended a selloff driven by fiscal concerns ahead of a closely watched upper house election on Sunday. Bond yields move inversely to prices. "Regardless of the outcome of the election, we are going to see additional fiscal spending coming out of Japan," said UBP's Casanova. Elsewhere, oil prices rose on Thursday, with Brent crude futures up 0.47 per cent at $US68.84 ($A105.90) a barrel. US crude futures gained 0.62 per cent to $US66.79 ($A102.74). Spot gold dipped 0.15 per cent to $US3,341.29 ($A5,139.85) an ounce.


SBS Australia
34 minutes ago
- SBS Australia
Jobless rate rises to highest level since 2021 as number of unemployed Australians jumps
The jobless rate has risen to 4.3 per cent — its highest rate since 2021 — surpassing expectations as the number of unemployed Australians jumped. Financial markets had expected the rate to remain steady at 4.1 per cent in June, but there was a nearly 34,000 increase in people without work, according to the Australian Bureau of Statistics. Employment rose by 2,000, up 2 per cent compared to the same month last year, after part-time employment grew by 40,000 and full-time employment fell by 38,000 people. The Reserve Bank of Australia (RBA) will closely monitor the labour market before its next monetary policy meeting in August, NAB's head of Australian economics Gareth Spence said. "The focus for the RBA will be ensuring the labour market remains healthy going forward," Spence said "The timing of [rate] cuts is not super important. It's more about, where do they end up?" Most economists had pencilled in a 0.25 per cent cut on the back of slowing inflation growth. Spence still expected the jobless rate to climb to 4.4 per cent by the end of 2025, but said economic indicators point to the labour market still being in a strong position. RBA said in its latest monetary policy decision that labour market conditions remained tight. "Measures of labour under-utilisation are at relatively low rates and business surveys and liaison suggest that availability of labour is still a constraint for a range of employers. "Alternatively, labour market outcomes may prove stronger than expected, given the signal from a range of leading indicators."