Jobs in Australia: Unemployment in August remained unchanged at 4.2 per cent

Australia’s unemployment rate held steady at 4.2 per cent in August in a sign there’s no urgency to cut interest rates later this month.

That unemployment rate was unchanged from July, according to data released on Thursday by the Australian Bureau of Statistics.

But employment dropped slightly, by 5000 jobs, after an exceptionally strong performance through 2024. This month also saw a shift away from full-time work to part-time.

The Reserve Bank wants inflation to stay around 2.5 per cent — and expects the jobless rate will rise modestly — to be comfortable to further reduce interest rates.

“This confirms that the labour market remains tight,” BDO chief economist Anders Magnusson said.

“For now, the RBA is likely to maintain its current stance of a slightly restrictive cash rate, with today’s data strengthening the case for a hold later this month.

“However, the Bank will put more weight on the September quarter CPI data in its next cash rate decision.”

KPMG’s Brendan Rynne was more optimistic and said another move was still likely by the end of the year while AMP’s My Bui expected a move in November, followed by another two cuts in 2026.

“Recent improvement in Australian economic data in Australia means that the RBA is in no rush to cut rates in the September meeting,” Ms Bui said.

“The latest GDP growth figures pointed to the economy starting to pick up some steam, the (June quarter) labour account release showed some stronger market sector employment — compared to non-market sectors such as health, education, and public administration.

“Today’s unemployment rate remained steady and does not look to increase significantly from here.

“The RBA is still in a cutting cycle, however.”

It comes after improved consumer spending helped boost recent economic growth figures while there have been signs inflation might be bouncing back.

Both will give the Reserve Bank reason for caution about the next interest rate move.

“We’re seeing the private sector start to demonstrate a little bit more growth now, which I think is positive,” RBA governor Michele Bullock said in Perth earlier this month after economic activity data.

“That’s good. But . . . it’s possible that if it keeps going, then there may not be many interest rate declines yet to come.”

Markets had overnight tipped the chances of a move at the RBA board meeting later this month as just 14 per cent. It’s widely thought that the board will instead hold rates until the following meeting in November.

Offshore, America’s Federal Reserve dropped its funds rate by 25 points on Wednesday amid concerns the jobs market was easing.