SYDNEY — Australia’s unemployment rate fell to its lowest level since August 1974 last month, further tightening the job market and supporting expectations that the Reserve Bank of Australia will deliver a further interest-rate rise of at least 50 basis points in August.
The unemployment rate dropped to 3.5% in June, the Australian Bureau of Statistics said Thursday. That compared with an expected rate of 3.8%.
Employment increased by 88,400 people and unemployment declined by 54,000. Economists had expected a further 30,000 jobs over the month.
Participation in the job market rose to a fresh record high of 66.8%, the ABS said.
The underutilization rate, which combines the unemployment and underemployment rates, remained at 9.6% in June, its lowest level since April 1982.
The surprising strength of the jobs report comes as employment vacancies have surged to record levels, with the numbers showing there is close to one job opening for every unemployed person.
The data also come ahead of second-quarter inflation figures due at the end of this month, which are expected to show consumer prices rising at their fastest pace in 30 years.
The RBA is expected to deliver its fourth rise in interest rates in as many months in August, and its third consecutive 50-basis-point hike.
With U.S. consumer prices rising at their fastest annual pace since 1981, and financial markets expecting the Federal Reserve to deliver a 100-basis-point tightening at its next policy meeting, pressure is growing on the RBA to raise interest rates by even more in August.
A recent 5.2% rise in Australia’s basic wage is expected to ignite faster wage growth across the economy in the months ahead, with Goldman Sachs economists saying Thursday that they don’t expect the RBA will have inflation back under control until 2024.