Reserve Bank Governor Pushes Back Against Claims of Surprising Jump in Unemployment

Reserve Bank governor Michele Bullock has pushed back against claims that a jump in unemployment has come as a surprise to the institution, saying the jobs market remains relatively strong despite a 0.2 percentage point lift in the unemployment rate in June. The jobless rate hit 4.3 per cent last month, its highest level since the pandemic, with employment growth effectively flat. The RBA had forecast unemployment to average 4.2 per cent through the June quarter.

Key Takeaways:

• The Reserve Bank governor, Michele Bullock, has refuted claims that the institution was surprised by the jump in unemployment, stating that the June quarter figures were in line with the RBA's forecast.
• While the unemployment rate increased to 4.3 per cent in June, the bank notes that most indicators suggest the jobs market remains relatively strong.
• The bank is continuing to monitor developments across the jobs market, with job vacancies having fallen but remaining elevated, and the average number of hours worked by people having declined.
• Bullock noted that the decline in hours has been voluntary, especially over the past year or so, and that some of the decline in hours has been driven by people choosing reduced work arrangements.
• The governor stated that the bank does not 'target' any one adjustment mechanism, such as a set number of job losses, as it seeks to bring demand and supply back into balance.
• The bank's board continues to judge that a measured and gradual approach to monetary policy easing is appropriate.

Statistics:

• The unemployment rate hit 4.3 per cent in June, its highest level since the pandemic.
• The jobless rate had been forecast to average 4.2 per cent through the June quarter.
• Employment growth was effectively flat in June.
• Job vacancies have fallen but remain elevated.
• The average number of hours worked by people has declined.
• Underlying inflation is likely to ease further in next week's figures after reaching a near four-year low in the March quarter.

Sources:

• Anika Foundation charity (speech by Reserve Bank governor Michele Bullock)
• News.com.au article by a news.com.au journalist (1 August 2023)