Australia Adds Far More Jobs Than Expected in June, Keeping Rate Hike Expectations Alive

Australia's labour market delivered a much stronger-than-expected performance in June, highlighting the economy's resilience and reinforcing expectations that the Reserve Bank of Australia (RBA) may raise interest rates again later this year.

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 increase. It marked the strongest monthly employment gain since April 2025.

The unemployment rate remained unchanged at 4.4%, while the labour force participation rate rose to 67.0%, its highest level in a year. The statistics agency said the increase reflected more older Australians entering the workforce, with most of the new jobs being part-time positions.

Total hours worked edged 0.2% higher after declining in May. At the same time, the underemployment rate increased to 6.5%, its highest reading since August 2024.

The stronger employment figures prompted investors to increase expectations that the RBA will tighten monetary policy again. Financial markets raised the probability of an August rate increase and almost fully priced in another hike before the end of the year.

The RBA has already lifted its benchmark interest rate three times in 2026, bringing it to 4.35% as it continues efforts to contain inflation. Policymakers have also warned that higher energy costs could keep inflation elevated.

Consumer inflation reached 4.0% annually in May, while the underlying inflation measure climbed to 3.6%, remaining above the central bank's target range of 2% to 3%.

Rising global oil prices have also added to inflation concerns. Brent crude has moved above $95 per barrel, increasing expectations that price pressures could remain stronger for longer.