November rate cut hopes return after shock joblessness
Make us a preferred source
Make us a preferred source on Google
More news: The surprise jump in the unemployment data has prompted some economists to flag that November is once again live for a rate cut.
Oxford Economics Australia head of economic research Harry Murphy Cruise said, in a statement, the jobs figures mean a rate cut is "warranted in November".
"The pace of Australia's labour market weakening has accelerated," Cruise said, noting this was a "bigger rise than both we and markets expected".
"The RBA is increasingly caught between a rock and a hard place. Its dual mandate — price stability and full employment — is now pulling in opposite directions," he said.
"Inflation looks set to come in hotter than the Bank’s latest forecasts, while the labour market is weaker than expected."
There has been plenty of anecdotal evidence suggesting the jobs market is softening and KPMG chief economist Brendan Rynne said this is finally showing up in the official data. He suspects there’s a high likelihood of “further job losses before Christmas”.
“This softening of the labour market should be more concerning to the RBA than the short-term fluctuations associated with inflation,” he said in a statement.
“At its upcoming meeting, the RBA should be looking bring the cash rate down to a more accommodating level to help businesses invest and encourage households to spend which should collectively help underpin the labour market.”
Betashares chief economist David Bassanese said in a note the data helps "lower the bar" for a rate cut next month. Economists will be looking closely at inflation data due at the end of the month to finalise their predictions.
RSM Australia economist Devika Shivadekar is maintaining her expectation for a 25 basis point cut at this meeting to 3.35%.
“With inflation already on a downward trajectory, a benign Q3 CPI print on 29 October could cement the case for a rate cut at the November meeting,” Shivadekar said.
State Street Investment Management APAC economist Krishna Bhimavarapu said the RBA might still hold steady but “this is no blip to brush off”. State Street expects a rate cut before the end of the year.
Unemployment rate jumps to 4.5% in September
The news: The unemployment rate has surged to 4.5% in September, following an upwardly revised jobless rate of 4.3% in August. There was an increase of 14,900 workers overall and a 33,900 jump in joblessness.
It is the highest unemployment rate since November 2021 and will surprise economists, with consensus expecting a 4.3% unemployment rate and 20,000 more jobs to be added.
The numbers: The employment-to-population ratio was flat at 64%.
There was a 9,000 increase in full-time roles, however this was entirely due to a 23,000 jump in men in full-time positions with women in full-time jobs declining by 15,000. Part-time employment jumped by 6,000, driven by an extra 19,000 women in these roles while men in part-time positions fell by 13,000.
The context: Economists have been shifting their rate cut expectations, with many pushing back their expectation into 2026. Some have also suggested the risk for fewer cuts, or no more at all, is rising.
However, the surprise labour force data will feed into these rate predictions.
The Reserve Bank next meets on 3 and 4 November.
What they said: "There were 34,000 more unemployed people in September. The number of employed people also grew, up 15,000 in the same period," ABS head of labour statistics Sean Crick said.
"As a result of these increases, the participation rate rose by 0.1 percentage points to 67%, although this is below the record high of 67.2% we saw at the beginning of the year."
The source: Australian Bureau of Statistics media release
