Australia Adds Far More Jobs Than Expected in June as Rate Hike Outlook Strengthens

Australia's labour market recorded a much stronger-than-expected performance in June, reinforcing expectations that the Reserve Bank of Australia (RBA) could raise interest rates again later this year to contain inflation.

According to data released by the Australian Bureau of Statistics, employment increased by 76,300 jobs in June compared with May, significantly exceeding economists' expectations of a 15,300-job gain. It marked the largest monthly increase since April 2025.

The unemployment rate remained unchanged at 4.4%, supported by a rise in the labour force participation rate to 67.0%, its highest level in a year. The statistics agency said more older Australians entered the workforce, while most of the employment growth came from part-time positions.

Financial markets reacted to the figures by pushing the Australian dollar higher and reducing government bond prices. Investors also increased expectations that the RBA could deliver another interest rate increase before the end of the year, with the probability of an August hike also moving higher.

The central bank has already lifted its policy rate three times in 2026 to 4.35% as it continues efforts to bring inflation under control. Policymakers have indicated that additional tightening remains possible, particularly as higher energy prices add to inflationary pressures.

Consumer inflation reached 4% annually in May, while the underlying inflation measure stood at 3.6%, remaining above the RBA's target range of 2% to 3%.

Although total hours worked edged up by 0.2% following a decline in May, underemployment increased to 6.5%, the highest level since August 2024. Analysts said the latest employment figures suggest labour market conditions remain resilient, even as higher oil prices continue to pose inflation risks.