We got some less-than-rosy economic news this morning. Unemployment, long dormant, has ticked up. And so, to have ASX shares and the share market.
This morning, the Australian Bureau of Statistics (ABS) released its latest labour force data, covering the month of June 2025. These showed Australia's seasonally adjusted unemployment rate rising from 4.1% to 4.3%, an increase of 34,000 people without jobs.
The numbers also revealed full-time employment declining by 38,200 jobs, while part-time employment rose by 40,200 jobs. Monthly hours worked decreased to 1.974 billion, while the underemployment rate ticked up to 6% over June.
Saying all of that, the workforce participation rate also increased to 67.1%.
Still, this is an unwelcome report in many ways. Rises in unemployment can often look worse than the reality. If the number of people looking for work rises (an inherently good thing, economically speaking), the unemployment rate can also tick up, even if no jobs are actually lost.
But that's not the case with these numbers from June. Sean Crick, the head of labour statistics at the ABS, stated that: "This month we saw the unemployment rate rise 0.2 percentage points, driven by a 34,000 increase in the number of unemployed people".
If unemployment is increasing, why are ASX investors seemingly celebrating this news today?
Why are ASX shares rising on poor unemployment data?
ASX shares are indeed rising. This morning, the S&P/ASX 200 Index (ASX: XJO) was up 0.5% soon after market open. But at the time of writing, the index is enjoying an even more enthusiastic 0.72% gain, seemingly ticking higher upon the release of today's employment numbers.
Are investors celebrating more people losing their jobs? Well, sort of.
Obviously, no one likes to see people out of work. However, when the Reserve Bank of Australia (RBA) unexpectedly kept interest rates on hold earlier this month, part of its reasoning was that it wanted to see what the next set of unemployment and inflation data looked like.
Well, they've seen it now. Rising unemployment indicates a slowing economy. But that also means the Reserve Bank, as a result, is far more likely to cut interest rates than if unemployment fell. And sooner.
As we've discussed here before, falling interest rates are viewed as a tailwind for ASX shares and the stock market by investors. That's because, amongst other factors, shares become more attractive to investors if the returns they can get from safer, interest-rate-sensitive investments like bonds and cash drop. As happens when interest rates fall.
That's probably why we are seeing investors respond so well to today's unemployment figures. Let's see what the RBA does next month.
