Unemployment rate rises to 3.5 per cent amid deteriorating global outlook

Labour force figures, released by the Australian Bureau of Statistics, showed unemployment in August rose to 3.5 per cent from 3.4 per cent in the prior month.

Around 33,000 people found employment over the month, while the number of unemployed people rose by 14,000.

The participation rate had inched 0.2 of a percentage point higher to 66.6 per cent, reflecting more people actively looking for work.

ANZ economists believe the labour figures and recent inflation data out of the US would justify another 50 basis point hike in October, which would push the cash rate to 2.85 per cent.

CommSec chief economist Craig James said the RBA would need to be wary of not aggressively hiking rates, which could slump consumer sentiment.

"Job security is paramount," he said.

"So it is important that the Reserve Bank gets it right, not being too aggressive in lifting rates."

READ MORE:

Employment Minister Tony Burke claimed loopholes within the wage bargaining system were resulting in stagnating wages, despite a tighter labour market.

"But these economic circumstances should be resulting in stronger wages growth," Mr Burke said.

"These results once again demonstrate why we need to update the workplace system and close the loopholes that are undermining wages growth."

The ACT's unemployment rate dropped to 2.7 per cent, however, Mr James noted there was volatility in the state data.

Tasmanian and Victoria had the largest increases in monthly unemployment.

"The job market remains tight. But there was volatility in some of the state results in August," Mr James said.

"The Queensland jobless rate hit a record low of 3.2 per cent. The key question is whether we are near - or at - full employment."

Australia's unemployment rate had been falling due to a tightening labour market in combination with high numbers of job vacancies. Labour account data from Wednesday showed more people were working more than one job.

The latest data also illustrates more full-time jobs had been created in the economy and the number of part-time positions had decreased.

Australia's slight rise in unemployment has coincided with a downgrade in the global economic outlook by National Australia Bank, which has been spurred on by surging inflation that has prompted central banks around the world to hike up interest rates.

NAB expects global growth to slow down to 2.3 per cent for 2023 and is the weakest level of growth since 1993 when not factoring in the shocks of the Global Financial Crisis and the COVID-19 pandemic.

Monetary policy, tightening particularly out of the United States, has fuelled high levels of volatility within financial markets.

"The tightening monetary policy in advanced economies - particularly the United States - is having an impact on financial conditions in emerging markets," NAB outlined in its guidance.

"The continued deterioration in economic conditions, and the prospect of further tightening of monetary policy to address inflationary pressures, has seen global equity markets trend lower since mid-August."

NAB in its guidance noted supply chain disruptions were easing but the war in Ukraine remained a key risk to global growth. It also flagged tensions between the US and China would heighten uncertainty.

ABS head of statistics Lauren Ford said employment numbers had risen after school holidays and widespread flooding in NSWs.

"The August rise in employment and hours occurred after the winter school holidays and flooding events in New South Wales, where we saw more people than usual working fewer hours in July," she said.

"COVID-19 and other illness related worker absences continued to be reflected in hours worked in August.

"The number of people working reduced hours due to being sick remained elevated in August, at around 760,000 people. This is around double the number we typically see at the end of winter."

The underemployment rate dropped 0.1 percentage point to 5.9 per cent.