Key facts
- Australia's unemployment rate rose to 4.6% in August, the highest level since late 2021.
- The number of people seeking work increased, pushing the participation rate to 67.1%.
- Despite the rise in unemployment, employment grew by 39,500 in August, exceeding forecasts.
- The Reserve Bank of Australia is widely expected to raise interest rates next week.
- Asian equities were mixed, with the MSCI Asia ex-Japan index down 0.64% and Japan's Nikkei 225 up 1.73%.
- Australian shares fell 1.2%, with the S&P/ASX 200 index reaching a three-month low.
Asian equities traded mixed and bond markets showed volatility on Thursday, as investors digested a mixed Australian employment report and continued to weigh geopolitical tensions and inflation concerns. The Australian dollar slipped to a seven-week low against the US dollar.
The Australian Bureau of Statistics reported that employment rose by 39,500 in August, surpassing market forecasts for a 20,000 increase. However, the unemployment rate climbed to 4.6%, a five-year high, as the labor force participation rate increased to 67.1% because more people sought work.
Despite the rise in unemployment, the labor market is still considered tight by the Reserve Bank of Australia. Governor Michele Bullock has indicated that an unemployment rate between 4.5% and 5.0% could aid in curbing inflation, suggesting a potential need for further rate increases. The RBA has already raised its policy rate three times this year to 4.35% to combat inflation, which remains above its 2% to 3% target range.
In regional markets, the MSCI Asia ex-Japan index fell 0.64%, while Japan's Nikkei 225 rose 1.73%. Australian shares declined 1.2%, with the S&P/ASX 200 index reaching a three-month low. The 10-year Japanese government bond yield hit a 30-year high.