Australia's unemployment rate drops to 4.4 per cent - but pressure remains over future interest rate hikes

Published: 03:03, 25 June 2026 | Updated: 03:14, 25 June 2026 Australia's unemployment rate fell back to 4.4 per cent after a surprise jump the month earlier, leaving the door open to more interest rate hikes. An extra 40,300 jobs were added to the economy in May, driving down the unemployment rate from 4.5 per cent, the Australian Bureau of Statistics reported on Thursday. The fall in the unemployment rate was in line with economist expectations. But the jump in employment exceeded consensus forecasts for around 25,000 new jobs to be added to the economy. The labour force survey is notoriously volatile and the drop in the unemployment rate comes after a 0.2 percentage point jump in the month prior. The result was driven by a reduction in the backlog of people who were waiting to start a job, ABS head of labour statistics Sean Crick said. While the result suggests the labour market is still relatively resilient, it doesn't necessarily suggest it is tightening further. After three interest rate rises so far in 2026, unemployment is expected to rise, but only gradually. Australia's unemployment rate fell back to 4.4 per cent (stock image) ABS head of labour statistics Sean Crick (pictured) said this was driven by a reduction in the backlog of people who were waiting to start a job Should rising job numbers justify more interest rate hikes, even if everyday costs are still climbing? What's your view?In its most recent set of forecasts, the Reserve Bank predicted the unemployment rate to average 4.2 per cent in the June quarter. A rise in the unemployment rate to 4.6 per cent or more would have added weight to the view that the RBA has tightened enough, while a stronger print of 4.4 per cent or less would leave the door open to more hikes, IG market analyst Tony Sycamore said before the data release. Part-time employment drove the growth in jobs, up 35,000 compared to 5,000 additional full-time jobs. The participation rate held steady at a relatively high 66.7 per cent. Consumer price figures released on Wednesday showed the underlying pulse of inflation continued to strengthen in May, even as a sharp fall in fuel prices caused headline inflation to fall. Fuel prices were still higher than before the onset of the Middle East conflict and businesses were passing on higher transport and material costs, Challenger chief economist Jonathan Kearns said. A three-monthly measure of the trimmed mean, which filters out some of the noise from the relatively new monthly measure, has been stuck about 0.8 per cent, the former RBA official said. 'That's too high for the RBA to be comfortable,' Dr Kearns said. The comments below have not been moderated. The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline. By posting your comment you agree to our house rules. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual We will automatically post your comment and a link to the news story to your Facebook timeline at the same time it is posted on MailOnline. To do this we will link your MailOnline account with your Facebook account. We’ll ask you to confirm this for your first post to Facebook. You can choose on each post whether you would like it to be posted to Facebook. Your details from Facebook will be used to provide you with tailored content, marketing and ads in line with our Privacy Policy.