Australia’s unemployment rate rose to 4.7 per cent in September, its highest level since late 2021. Employers cut nearly 40,000 jobs, but economists still expect another interest rate rise.
According to the latest Australian Bureau of Statistics (ABS) data, the number of employed people fell by 39,300 to 14.78 million in seasonally adjusted terms. Over the same period, the number of unemployed Australians rose by 8,900 to 732,000.
The unemployment rate rose 0.1 percentage points. Participation fell 0.2 points to 66.8 per cent, and the employment-to-population ratio dropped 0.3 points to 63.6 per cent.
Part-time work drove the decline. Part-time employment fell by 73,700, while full-time employment rose by 34,400. Part-time hours worked fell 1.5 per cent. Youth unemployment climbed 0.3 points to 11.1 per cent. Both measures matter to retailers, which rely heavily on part-time and younger staff.
“This September a higher proportion of people remained unemployed compared to recent years,” ABS head of labour statistics Sean Crick said.
KPMG chief economist Dr Brendan Rynne said the softer result was unlikely to change the Reserve Bank’s course.
“We expect the RBA will have mixed feelings about today’s data,” Rynne said. “On the one hand, the slowing of employment demand and a reduction in the number of people employed will be greeted positively, but the reduced labour demand is now pushing the unemployment rate above levels consistent with full employment.”
KPMG still expects the RBA to lift the cash rate on Melbourne Cup Day. Rynne argued the slowdown is not yet enough to pull inflation back to target.
“While today’s numbers show a slowing in the labour market, it is unlikely to be considered sufficient to take enough demand out of the economy to slow inflation and bring it back to the 2.5 per cent target level anytime soon,” he said. “So, while heading in the right direction, the unemployment rate still has a way to go to get the RBA feeling comfortable.”
He also pointed to pressure from offshore. According to KPMG, US annual inflation rose to 3.7 per cent in September from 3.4 per cent in August. That has strengthened expectations that the US Federal Reserve will raise rates later this month.
“[That] would box in the RBA to lift again before the end of the year,” Rynne said.
The ABS cautioned that a small residual effect from its new survey methodology may remain in the September seasonally adjusted figures. It recommended trend data as the best guide to the labour market. In trend terms, unemployment held steady at 4.6 per cent.