SYDNEY — Australia’s unemployment continued to fall in July, supporting expectations that the Reserve Bank of Australia will raise its official interest rates by a further 50 basis points in September. The jobless rate fell to 3.4% in the month from 3.5% in June, plumbing its lowest level in half a century, the Australian Bureau of Statistics said Thursday.
The drop in unemployment came even as the economy shed 40,900 jobs over the month. The apparent conflict in the data is explained by a big fall in job-market participation. The participation rate fell 0.3 percentage point in July from a record of 66.8% in June. Still, it remained 0.5 percentage point higher than before the pandemic. July included winter school holidays, elevated worker absences associated with Covid-19 and other illnesses and flooding events in New South Wales, the ABS said. Overall, the job market remains extremely tight, adding to expectations that wage growth will rise strongly in the second half of this year, driving inflation upward while ensuring the RBA continues to push interest rates higher. The RBA has raised the cash rate by 175 basis points since May, taking it to 1.85%, a level still well short of neutral …