Australia’s June employment far exceeds expectations, but outlook for RBA rate hike in August remains uncertain

(1) In June, Australia’s employment unexpectedly increased by 76,300 people (expected only 15,000), while the unemployment rate remained steady at 4.4%. Following the data release, the Australian dollar strengthened and short-term yields rose, with markets expecting the Reserve Bank of Australia to maintain its hawkish stance. (2) However, Investinglive analyst Eamonn Sheridan pointed out that the average quarterly unemployment rate reached 4.4%, higher than the Reserve Bank of Australia's own forecast of 4.2%. At the same time, both the underemployment rate and the labor underutilisation rate are at multi-month highs, making the hawkish policy signal less clear. (3) Overall, as the Reserve Bank of Australia paused in June after three consecutive rate hikes, the likelihood of a 25 basis point rate increase in August is actually lower than the headline strength of the data suggests. However, given the previous substantial rate hikes, the market may still see this as a realistic risk ahead of the upcoming meetings.