More Australians looking for work pushes unemployment to 4.6%

Fresh labour force survey released by the ABS showed the number of unemployed people increased by 28,200, pushing the unemployment rate up to 4.6% from 4.5% in July.

Market expectations were for the jobless rate to hold steady in August. 

Employment also exceeded forecasts of 20,000 jobs, with 39,000 Australians finding work during the month.

The growth in size of the labour force pushed the participation rate up 0.2 percentage points to 67.1%. 

The participation rate measures the proportion of Australians who are either employed or actively looking for work. 

As labour force growth outpaced hiring in August, more people moved into unemployment.

Sean Crick, ABS head of labour statistics, confirmed the share of people moving from outside the labour force into unemployment was the highest seen in recent years. 

"This August we recorded a higher proportion of people who were previously not in the labour force moving to being unemployed compared to recent years," Mr Crick said. 

Part-time hiring drives jobs growth

Part-time employment rose by 46,000 in August, effectively unwinding the 32,000 roles lost in the month prior. 

However, full-time roles fell by 6,000. 

The underemployment rate fell by another 0.1 ppt to 6.2% in August but remains above the 5.9% recorded in January. 

Higher living costs can contribute to elevated underemployment, as workers seek additional hours to help keep pace with household expenses.

Total hours worked rose by 0.7%, equivalent to around 14 million additional hours, after falling by the same amount in July.

"This is partly due to having more employed people working zero hours last month compared to usual July months," Mr Crick said. 

Zooming into ABS’ trend state-by-state data, Tasmania and Victoria recorded the highest unemployment rates at 5.2% and 5.1%, respectively. 

The ACT posted the lowest unemployment rate at 4%.  

How this jobs data could influence the RBA

The latest rise in the unemployment rate suggests the labour market is cooling, however this may not be enough to significantly alter the RBA Board’s decision on Tuesday.

Speaking at a Committee for Economic Development of Australia event earlier this week, RBA Gov Michele Bullock suggested a rate between 4.5% and 5% would "probably take enough heat out of the labour market" to ease inflation pressures.

Gov. Bullock further stressed there was still excess demand in the economy.

She reiterated that while the RBA has a dual mandate to preserve full employment and manage inflation, it remains focused on bringing inflation back to target.

Australian unions urge the RBA to pause on Tuesday

The Australian Council of Trade Unions argued the rise in unemployment showed monetary policy was already slowing the economy and should give the RBA reason to pause.

"Today's job figures already show more Australians are out of work," ACTU secretary Melissa Donnelly said following the ABS release.

"This should give the Reserve Bank an opportunity to change course and protect Australians already doing it tough when it meets to consider the cash rate next week," she added. 

The union movement has been critical of recent comments from the RBA governor that unemployment may need to rise further to alleviate inflation pressures.

According to ACTU, a 5% unemployment rate could mean as many as 55,000 more people out of work. 

"Workers are not the cause of current inflation pressures, so adding further stress to their budgets is just wrong," Ms Donnelly said.