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Despite adding more than 50,000 jobs from May to June, Australia's unemployment rate rose to 4.1%, as more people continued to look for work.

According to the latest Bureau of Statistics data, the unemployment rate in June was slightly higher than the previous month, which was 4%. The uptick has made economists expect a rise in interest rate by the Reserve Bank Of Australia (RBA), when it meets in August. Earlier, the chances of interest hike, as indicated by swaps, was 12%, and now it's 20%, Reuters reported.

The unemployment nudged ahead though 50,200 more jobs were created, over the market forecast of 20,000 jobs. This was in addition to a rise in full employment by 43,300, which marked a significant growth for the second consecutive month.

The bureau's head of labor statistics, Bjorn Jarvis, reasoned that the rise in the unemployment rate was due to a high ratio of Australians, aged 15 or above, working or searching for a job.

"The participation rate in June was only 0.1 percentage point lower than the historical high of 67.0% in November 2023," ABC News quoted Jarvis. "The employment-to-population ratio rose by 0.1 percentage point to 64.2%, which was also close to its historical high of 64.4% in November 2023. This, along with the continued high level of job vacancies, suggests the labor market remains relatively tight, despite the unemployment rate being above 4.0% since April."

Unemployment figures are key in RBA decisions on hiking interest rates. As the forecast was only 20,000 jobs, the markets responded to the unexpected growth by raising market interest rates, while causing a dip in the stock market.

RBC Capital Markets chief economist Su-Lin Ong predicted a slow rate cut midway through next year.

"On its own, it does not tip the balance for the August meeting which is finely balanced in our view, with the RBA reluctant to move and likely only hiking if forced by second quarter inflation on July 31," she said.

However, Jarvis noted that though the unemployment rate has increased by half a percentage point compared to a year ago, it has remained 1.1 percentage points lower than in March 2020, just before COVID lockdowns leading to a recession in the economy.

Another encouraging factor was the decrease in youth unemployment rate, which lowered to 9.5% from 9.7%, the first decline in four months.