The number of people looking for a job or underemployed has dropped to its lowest level in 40 years as the unemployment rate remains steady at 3.9 per cent.
Some economists warned the strong jobs figures, combined with the independent pay umpire’s decision on Wednesday to give Australia’s lowest-paid workers a $40-a-week pay rise, would add to inflationary pressures and could force the RBA to raise rates higher and faster.
To two decimal points, the unemployment rate rose slightly from 3.86 per cent in April to 3.90 per cent as people who were not in the labour market started looking for work. UBS economists said the drop in underutilisation – which combines unemployment and underemployment – showed there was shrinking spare capacity in the labour market.“Overall, this argues for rapid RBA rate hikes ahead,” they said, adding the minimum wage rise and the USCommSec chief economist Craig James said the jobs data highlighted why Australia did not need rates at “emergency” levels any more after dropping to a record-low 0.1 per cent during the pandemic.
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