An economist believes the Reserve Bank of Australia (RBA) could have even more reason to cut interest rates next month after employment data was released this week. While the unemployment rate remained steady at 4.1 per cent, 2,500 fewer Aussies were in a job in May compared with April.

That followed two months of strong job growth, especially when 89,000 people joined the workforce in April alone. KPMG chief economist Brendan Rynne thinks this strengthens the chance homeowners will get another 0.25 basis point reduction in the cash rate in early July.

"At some point - and the likelihood is it will be sooner rather than later - this run of positive outcomes is likely to stop, as non-market sector employment growth in aged care, health care and public sector services slows," he said.

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RBA 'needs to get ahead of the curve'

Rynne said the private sector won't be strong enough to cope if the public sector slows, and we could soon see unemployment figures "blowing out" in the future.

The 2,500 fewer Aussies in a job was far below the 25,000 increase that was expected for May.

However, the 4.1 per cent unemployment rate is still below the RBA's expectations of rising to 4.3 per cent this year.

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While we've already had two rate cuts so far this year, further reductions could be needed as government spending reduces and the economy continues to lag.

"This means that the upcoming RBA decision is increasingly important," Rynne said.

"The contractionary cash rate settings have done their job from an inflation perspective, despite the likelihood of a bounce in headline inflation as government rebates drop off and recent oil price surges feed their way into the system.

"[The] labour force data should be telling the RBA to get ahead of the curve and drop the cash rate by 25 basis points at the next meeting if it wants to balance its dual mandate obligations."

How likely is the RBA to cut interest rates at the July meeting?

The ASX's Rate Cut Tracker analyses market data to assess this very question.

Since June 3, this tracker has ascribed an above 80 per cent chance, with three days even seeing an 89 per cent chance.

However, June 19 saw that likelihood dip down to 78 per cent.

NAB is the only of the Big Four banks predicting a rate cut could come after the RBA's July 7-8 meeting.