WEEKLY E-MAIL

21 July 2025

LATEST UNEMPLOYMENT DATA COULD LEAD TO INTEREST RATE CUT

By Rebecca Dhillon

Data released last week by the Australian Bureau of Statistics (ABS) showed Australia’s seasonally adjusted unemployment rate rose to 4.3% in June 2025, the highest level since November 2021. The number of people in full-time employment decreased by 38,000, while the number of unemployed people increased by 34,000.

Source: Australian Bureau of Statistics

While many economists had forecast a gradual uptick in unemployment by the end of the calendar year, this latest data was unexpected, particularly as the unemployment rate has remained steady at 4.1% for the past three consecutive months.

Broader macroeconomic headwinds are compounding labour market challenges. Heightened global uncertainty, driven by US tariffs, geopolitical tensions, and elevated interest rates, alongside persistent cost-of-living pressures, has created conditions for rising unemployment. The National Australia Bank’s June 2025 Quarterly Business Survey reported that business conditions have deteriorated to their lowest level since Q3 2020, signalling a clear softening in the jobs market.

In light of the latest data, expectations are mounting for the Reserve Bank of Australia (RBA) to cut interest rates at its upcoming August monetary policy meeting. This follows the Bank’s decision to keep the cash rate unchanged at 3.85% in July, citing that labour conditions remained tight. However, recent employment figures now cast doubt on that assessment, suggesting the decision may have missed emerging signs of a softening jobs market.

Rebecca Dhillon
Senior Para-Planner
Authorised Representative No. 453075

If you have any questions or comments, please email me at rebecca@gfmwealth.com.au

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