Australia’s economy added far more jobs than expected last month, making it less likely the Reserve Bank will be opting for an interest rate cut this side of Christmas.
The unemployment rate in September was 4.1%, the Australian Bureau of Statistics reported on Thursday. Economists had predicted the rate would remain at the 4.2% rate initially reported for August. The ABS has now revised August’s rate down to 4.1%
The economy added 64,100 jobs last month. Economists had predicted a net gain of 25,000 jobs or about half the 47,500 created in August, according to the ABS. Of the new jobs created in September, 51,600 were full-time roles.
The participation rate, one measure of the share of working-age people in the labour market, came in at a record 67.2%. Hours worked also increased to 1.97bn.
The strength of the labour market has been one reason why most households have so far been able to weather the sharpest burst of inflation and interest rate hikes in three decades.
Still, shrinking job ads and vacancies point to an emerging weakness in employment. Both Treasury and the RBA are forecasting the jobless rate will rise to about 4.4-4.5% by the middle of 2025, a figure still lower than most years since the mid-1970s.
Prior to Thursday’s release, the Albanese government had said almost 978,000 jobs had been added since it came to office in May 2022. The next closest tally, in absolute terms, was the final term of the Howard government between 2004-07.
Whether the government can maintain its bragging rights will depend on the timing of the federal election and whether the RBA has started cutting its cash rate by then.
Ahead of the latest data, investors were betting on a 40% chance of a rate reduction by December and 70% of one by February.
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The Australian dollar moved higher to just under 67 US cents and stocks pared their gains for the day after the jobs figures landed. Those moves implied investors had reduced their estimates of how soon the RBA would be cutting the cash rate.
