The latest jobs stats and AI hacks

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Carrington Clarke (0:38)

Hot off the presses, new jobs data shows the unemployment rate has risen in Australia, but is it enough to halt the RBA's expected interest rate hike next week? An agent from Open AI has hacked into a Services Australia portal. Could this damage Big Tech's reputation at a time when it's asking for government support to invest in Australia? Welcome to ABC Business Daily.

I'm Carrington Clarke.

Alicia Barry (1:07)

And I'm Alicia Barry, ABC Finance journalist and host of The Business on Thursdays.

Carrington Clarke (1:13)

Alicia, thank you so much for joining us. We've pushed the record time back a little bit, but it is just a time stamp at 10 past 12 here in Sydney as we talk about what this latest unemployment number means. It was kind of a fun week for people who are interested in employment data because Michelle Bullock, the Reserve Bank governor, kind of put some extra, some forward sizzle about this particular data point. I feel like inflation gets all the attention in recent times. GDP has kind of fallen off its mantels, the number one piece of data. But actually, unemployment this week at least, ahead of next week's Reserve Bank decision, kind of took preeminence because we're not going to read another inflation read before next week. First off, let's just look at the headline. What did you make of it?

Does this potentially move the dial when it comes to Reserve Bank decision about whether or not to hike interest rates?

Alicia Barry (2:04)

Well, the most interesting thing about this, as you say, Carrington, is Michelle Bullock sort of put this in focus because she spoke, as you spoke to Millie yesterday, about the RBA needs, the unemployment rate to rise between 4.5% up to 5% to take the pressure off inflation. So everyone's been watching this number really closely as to whether it would change the calculation for the RBA next Tuesday. So the expectations were that we would see unemployment for the month of August come in at 4.5%.

It actually surprised on the upside, as economists say, it rose to 4.6%. Now, this is the highest level since November 2021, when we were coming out of COVID lockdowns in the big states. And the reason that we saw the unemployment rate rise wasn't because we saw jobs lost or not enough jobs created. There were 39,000 and a half jobs created in the month. They were all part-time when you look at the full-time part-time sort of calculation. So 39,500 part-time jobs added to the economy. But it was because the amount of people in work or looking for work actually rose and that increased the participation rate. And so that jobs creation wasn't enough for all of those sort of new entrants in the labor market to keep the unemployment rate down. Essentially the supply of people and the supply of jobs both grew.

And that sort of, I guess, helped in the way the ABS does it, make the unemployment rate a little higher. But it is on the headline still higher than the bulk of economists were expecting or at least the market consensus forecast.

Carrington Clarke (3:53)

Yeah, it is, it's interesting that there is so much now emphasis on this data point because usually that just wouldn't be. But because I think of Michelle Bullock's comments, people were looking to see whether or not this would potentially change the direction of the RBA deciding whether or not to hike next week. A few things to note, Michelle Bullock is obviously the most important person who when it comes to determining interest rates in Australia, she's one of the voting members, but she's only one of nine voting members. But the Reserve Bank does have a lot of sway, even though there's independent members on that board, because they will also be providing them with documents kind of giving the RBA's take on where the economy is heading.

Up until today, the songbook from the Reserve Bank that the top officials were all singing from in their recent media appearances or when appearing before members of industry was that inflation remains the key issue. And yes, Michelle Bullock then gave us this extra bit of information, which was the suggestion that they think between four and a half to 5% was kind of where unemployment needed to sit in order to take some inflationary pressure out of the economy. So that's why this number became so important. That the market pricing is interesting. There has been a slight fall, ever so slight fall in the expectations, according to Money Flow, about whether or not we will see a hike next week. But still overwhelmingly, the markets think that we will see a hike. It is a difficult position for the reserve bank to be in because they won't get the latest inflation rate until the day after they decide what to do with interest rates.