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The unemployment rate (seasonally adjusted) increased from 4.1% in May to 4.3% in June. This is the biggest jump in 14 months and the second biggest increase since the end of 2021.
The Australia Institute criticised the Reserve Bank of Australia’s (RBA) decision to hold the cash rate at 3.85% in July, arguing that it was based on incorrect assumptions and risks driving unemployment higher. “They’ve completely misread the economy,” the Institute said.
The RBA aims to get the inflation rate to a sustainable 2.5%. One of the levers they use to manage inflation is employment. An increase in unemployment tends to drive down inflation.
In the RBA’s monetary policy statement on 8 July, they stated that the March quarter national accounts showed that domestic demand had picked up over the past six months.
However, the Australia Institute says domestic demand in the first quarter grew just 0.18%, the weakest growth in more than three years. Household consumption grew by only 0.4%, around half the long-term average.
The Institute did not mince words. “Its [RBA] decision to keep the rate on hold was a cruel response to a weakening labour market and economy. They failed to keep to their mandate of ensuring full employment and instead sentenced more Australians to losing their jobs.”
#accountant #unemployment #inflation
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