Australians are increasingly “scrambling” to secure additional income as soaring living costs and the looming threat of further interest rate hikes force more people into an already strained labour market.
New data from the Australian Bureau of Statistics (ABS) released today shows the national unemployment rate has ticked up to 4.6% in August, rising from 4.5% the previous month. The figure marks the highest jobless rate recorded since the pandemic, defying analyst predictions that the rate would remain steady.
While the data revealed a headline increase of 39,000 employed people, the growth was driven entirely by a surge in part-time roles, which were offset by a 6,000-person decline in full-time employment. Economists point to a rising participation rate—now sitting just below its all-time peak of 67.2%—as evidence that more people are entering the workforce to keep their heads above water.
“Households are still feeling the pinch of higher inflation and anticipatory higher mortgage rates,” said Brendan Rynne, chief economist at KPMG. “This suggests households are scrambling to find more income to help cover their rising day-to-day expenses and future increases in mortgage payments.”
The strain on household budgets is becoming increasingly visible in official statistics. Earlier this month, the ABS reported that the number of Australians working multiple jobs has surpassed 1 million for the first time, with the share of the workforce holding down more than one job hitting a record 6.9%.
Despite the weakening labour market, financial experts warn that the slight uptick in unemployment is unlikely to deter the Reserve Bank of Australia (RBA) from hitting mortgage holders with another interest rate hike next Tuesday. Central bank officials have repeatedly cautioned that inflation, currently at 3.5%, is not cooling at the desired pace.
With the RBA’s cash rate widely expected to rise from 4.35% to 4.6%—a level not seen in nearly 15 years—many borrowers are bracing for further financial pressure. Compounding the issue are concerns over potential supply chain disruptions and higher fuel costs linked to the ongoing conflict between the US, Israel, and Iran, which analysts fear could further fuel inflationary pressures.
Ryan Wells, an economist at Westpac, noted that traditional economic theory is being overridden by the current cost-of-living crisis. “While a softer economy and sub-par employment growth would typically discourage some individuals in their search for work, cost-of-living pressures and interest rate rises are acting as a counterweight, encouraging more people into the labour market,” Wells said.
With the RBA board meeting scheduled for Melbourne Cup day, the consensus among analysts is clear: the path of least resistance for the central bank remains further tightening, even as the broader economy shows clear signs of fatigue.
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