Unemployment Down Under unexpectedly drops in July, sending Aussie higher

Australia´s job market continued to be trundle along, the latest government data revealed, potentially eliminating the case for lower interest rates Down Under in 2016 even, although the details of the same report were far weaker than the headlines would suggest, according to some economists.

Employment jumped by 26,200 in July, in turn driving the unemployment rate down from 5.8% in June to 5.7%.

Economists had anticipated a gain of 10,000 job positions and that the rate of unemployment would be unchanged at 5.8%.

The rate of labour force participation was steady at 64.9%.

Despite the strong headline figures, full-time employment in fact registered a sharp 45,400 decrease, with the shortfall having been made up by an even larger 71,600 increase in the number of part-time workers.

Commenting on the figures, Rahul Bajoria at Barclays Research said: "No ‘smoking gun’ found in today’s report to build the case for near-term easing [...].

"While the central bank retains an easing bias remains, we think the RBA’s next move will depend on inflation dynamics. Australia’s economic outlook remains resilient to external shocks, and unless there is significant AUD appreciation, we think there will be no urgency to ease further. Moreover, with today’s labor market data indicating an overall improvement in job creation, we expect the RBA to stay on hold through 2016."

Following the release of Thursday´s data markets were left discounting 48% odds of a rate cut by the Reserve Bank of Australia at its meeting the following November, the same as before the report was published, according to Bajoria.

As of 10:23 BST, the Australian dollar was 0.44% higher against its US counterpart to 0.7689 but off its intra-day high of 0.7723.