The unemployment rate in Australia rose slightly last month, but a surprise increase in the number of employed persons has raised the prospect of a third consecutive rate hike next month.

An increase in the number of people looking for work drove the 0.1 per cent increase to the unemployment rate, with it now sitting at 5.8 per cent. Analysts had expected the change but were caught off guard by the second consecutive month of increases to the number of employed persons – a sign that the employment market may have bottomed.

Earlier in the year there were fears the rate of unemployment could surge beyond eight per cent but now it looks as if the peak will be around six per cent.

The news has led many to predict the RBA will make another 25 basis point increase to the cash rate at their Board Meeting next month, but it is not yet a fait accompli. The RBA has raised the cash rate by 0.25 per cent at its last two Board meetings and they may wish to pause unil next year to assess their impact. Their latest commentary has reiterated that interest rate movements will be “gradual” but further strong economic data may force them to make an unprecedented third hike in a row.

The cash rate currently sits at 3.50 per cent, well below last year’s peak of 7.25%, but steadily working toward a more “normal” rate of around 5-6 per cent.