Australia unemployment rises to 4.5 per cent as Tasmania and Victoria record nation’s highest jobless rates

Unemployment rose in July to 4.5 per cent for the first time since April and caused the Australian dollar to fall in a strong sign the Reserve Bank’s rate hikes may be over.

The jobless level rose from 4.4 per cent in June as 15,800 people lost their job, with unemployment back to the levels of the early months of the Iran war.

This occurred as 32,200 part-time jobs were lost as 16,300 full-time jobs were gained.

Since the end of COVID lockdowns in Sydney and Melbourne at the end of 2021, unemployment has only hit 4.5 per cent three times in September 2025, April this year and July, which is at the edge of full employment.

The 691,500 people without a job in July was the worst since April, which in itself was the highest number since October 2021, as the labour market participation rate last month eased to 66.9 per cent, down from 67 per cent, as fewer people either had a job or searched for employment.

Ebury economist Anthony Malouf said the unemployment increase was a sign the Reserve Bank was done with rate hikes, despite inflation remaining high.

“The July print may offer the RBA some confidence that the labour market is loosening as intended, which in turn should help ease inflation pressures over time,” he said.

“The data also reinforces our long-standing view that the RBA’s hiking cycle is over.”

The Australian dollar was 0.2 per cent weaker at 71.1 US cents after the Australian Bureau of Statistics labour force data was released.

While the big four banks are no longer expecting a rate hike, the futures market still is next year.

But the uptick in the jobless rate has seen pricing fall for a February RBA increase, which would take the Reserve Bank cash rate to a 15-year high of 4.6 per cent.

Market pricing fell to 68 per cent, down from 76 per cent before the official figures were released.

Treasurer Jim Chalmers blamed the Middle East conflict for pushing unemployment higher.

“It’s unsurprising to see unemployment tick up a bit given the challenges coming at us from around the world,” he said.

“The fact that our unemployment rate remains relatively low in the face of so much global uncertainty, reflects the resilience of Australia’s economy.”

Tasmania has joined Victoria in having the nation’s highest jobless rate of 5.1 per cent, just 10 months after the Apple Isle State had Australia’s lowest jobless rate of 3.3 per cent.

South Australia in July had the lowest unemployment rate of 4.1 per cent, followed by NSW and Queensland on 4.2 per cent.

Mining-rich Western Australia was also below average with a 4.4 per cent jobless rate but as recently as August last year, it had a 3.8 per cent jobless rate when iron ore prices were a bit stronger.

Overall youth unemployment of 10.4 per cent was more than double the national unemployment rate, with shadow treasurer Tim Wilson and shadow employment minister Jane Hume noting 63,800 more young Australians were without work since Labor came to power in May 2022.

“This is Labor’s economy: more Australians out of work, young Australians being left behind and working Australians going backwards,” Senator Hume said.

“Labor can talk about headline jobs numbers all it likes, but the fact is that employment growth has simply kept pace up with population growth.”

The futures market was already expecting the Reserve Bank to keep rates on hold on September 29, following its next two-day meeting.

The RBA released updated forecasts earlier this month having unemployment reaching 4.5 per cent by December 2026, climbing to 4.6 per cent in mid-2027. 4.7 per cent by the end of next year and 4.8 per cent by June 2028.

This would see unemployment reach levels last seen in October 2021.

Even though unemployment is low by historic standards, the relatively tight labour market is yet to fuel a wage-price spiral with pay increases continuing to lag behind inflation, meaning a cut in real wages.