Australian employment saw a slight increase in June, but the jobless rate rose to 4.3%, the highest since late 2021. Investors reacted by sending the Australian dollar down 0.7% to $0.6480. The market now predicts an 85% chance of a rate cut next month, up from 76% previously.

The Australian Bureau of Statistics reported a 2,000 increase in net employment in June, falling short of the expected 20,000 increase. Full-time jobs dropped by 38,200, and the participation rate ticked up to 67.1%. The labor market is facing challenges due to factors like President Trump’s tariffs affecting business investment.

Despite the economy’s slow growth, the labor market had remained resilient. The Reserve Bank of Australia previously cut interest rates twice this year but chose to keep them steady at 3.85% earlier this month. The RBA is waiting for third-quarter consumer price data to confirm if inflation has been tamed.

While leading indicators like job vacancies showed signs of stabilizing, the labor market is showing signs of deceleration. Private sector data for June indicated a rebound in job ads to one-year highs. Analysts question the RBA’s decision to prioritize inflation over growth and jobs at the recent meeting.

Read more at Yahoo Finance: Australia’s jobless rate hits 3-1/2-year high, ramps up easing bets for August