Prepare for more rate hikes as unemployment falls despite Reserve Bank’s heaviest hikes since 1989
- Unemployment fell to 3.6 percent in May
- This despite aggressive rate increases
Australia’s unemployment rate has fallen despite the Reserve Bank raising rates at its most aggressive pace since 1989.
The unemployment rate fell to 3.6 percent in May from 3.7 percent in April.
Last month, 75,900 new jobs were created, bringing the unemployment rate closer to March’s 48-year low of 3.5 percent.
This came despite the Reserve Bank’s aggressive tightening of monetary policy, which pushed interest rates in June to an 11-year high of 4.1 percent for the 12th time in 13 months.
The latest data from the Australian Bureau of Statistics has fueled fears of more rate hikes amid fears that a tighter labor market will add to inflationary pressures following the arrival of 387,000 new migrants last year.
Australia’s unemployment rate has fallen despite the Reserve Bank raising rates at its most aggressive pace since 1989 (pictured a bartender in Bunbury, south of Perth)
Borrowers are already grappling with the most severe pace of rate hikes since 1989, with inflation reaching 6.8 percent in April, more than double the RBA’s target of 2 to 3 percent.
More rate hikes to curb inflation also increase the risk of a recession – something not seen in Australia since 1991 due to rate hikes.
New ABS data released on Thursday also showed that 387,000 new migrants moved to Australia in 2022 during a rental crisis.
Australia’s population growth rate of 1.9 percent was also by far the highest in the developed world.
The property market in Australia is already recovering despite interest rate hikes, with data from CoreLogic showing house prices in every state and capital rising in May.
Sydney, where more migrants are moving to live, saw the biggest increase at 2.1 percent, pushing the median house price to an even more unaffordable level of $1.294 million.