Australia’s jobless rate has ticked higher to 4.2 per cent in July from 4.1 per cent in June, broadly in line with consensus forecasts.

Another 58,000 jobs were added to the economy in the month, which was more than the 20,000 employment increase pencilled in by Commonwealth Bank and Westpac economists ahead of the Australian Bureau of Statistics (ABS) release on Thursday.

While the amount of new jobs added to the economy was above forecast, so was growth in the number of unemployed.

“The unemployment rate rose to 4.2 per cent in July, with the number of unemployed growing by 24,000 people and employed by around 58,000,” ABS head of labour statistics Kate Lamb said.

“This combined increase lifted the participation rate to a record high of 67.1 per cent.”

The unemployment rate was the highest since November 2021, but was still relatively low at one percentage point lower than the pre-COVID level of March 2020.

“The employment and participation measures remain historically high while unemployment and underemployment measures remain historically low, compared with what we saw before the pandemic,” she said.

“This suggests the labour market remains quite tight.”

The Reserve Bank of Australia will be closely watching the strength of the labour market – a key economic indicator informing its cash rate settings – as it tries to strike the right balance between taming persistently high inflation and further stalling a slowing economy.

Strength in the jobs market is expected to gradually unwind in an economy already dulled by higher interest rates.

The RBA forecasts the unemployment rate to reach 4.3 per cent by the end of 2024 before plateauing at 4.4 per cent for the next two years.

-AAP