Australia's Jobless Rate Is 4.7 Per Cent. The Reserve Bank Pencilled In 4.5 for Christmas
Employment fell by 39,300 in September and the unemployment rate held at a five-year high after an upward revision to August. The Reserve Bank raised the cash rate to 4.60 per cent a fortnight ago with a forecast the labour market has already overshot.
Employment in Australia decreased by 39,300 people in September to 14,782,700, the Australian Bureau of Statistics said on Thursday, with full-time jobs up 34,400 and part-time jobs down 73,700. The unemployment rate was 4.7 per cent in seasonally adjusted terms, the highest since October 2021, after the ABS revised August up from 4.6 to 4.7. The participation rate fell 0.2 points to 66.8 per cent, the employment-to-population ratio fell 0.3 points to 63.6 per cent, underemployment rose to 6.3 per cent and the youth unemployment rate rose 0.3 points to 11.1 per cent. Hours worked edged up 0.1 per cent.
Forecasters had expected a gain of about 20,000 jobs and an unchanged rate of 4.6 per cent. It was the biggest monthly fall in employment since February last year. The ABS says the September figures are fit for use, while cautioning that residual effects from changes to its supplementary survey collection may still be present and that the trend series is the better guide. On that trend measure the rate is 4.6 per cent and employment growth has slowed to around 16,000 a month after August's gain was trimmed to 29,300.
The case for one more move rests on a single data point: the 28 October CPI.
From the analysisThe number that matters sits in the Reserve Bank's own forecast table. The August Statement on Monetary Policy had unemployment at 4.5 per cent by the December quarter. The September quarter has now averaged 4.63 per cent, ABC News notes, so the bank's year-end projection was overtaken before the quarter it refers to had begun. Tom Kennedy of JP Morgan puts the rise since the bank began lifting rates in February at 0.6 percentage points, the largest nine-month increase in more than a decade outside the pandemic, and says the September hike has not yet reached the labour market at all.
The bank has raised the cash rate four times this year, most recently on 29 September to 4.60 per cent, a 15-year high, with inflation at 3.5 per cent against a 2 to 3 per cent target and a statement that it stands ready to go again. Economists are now split down the middle. JP Morgan expects rates on hold from here. CBA expects a hold in November with the risk tilted to a rise. Westpac, EY and BetaShares still expect a hike on Melbourne Cup Day, 3 November, conditional on the September quarter inflation print due on 28 October. Oxford Economics Australia sees unemployment above 4.8 per cent by late 2027 as the oil shock and the rate rises work through.
We think the labour market has now done the bank's arguing for it, and that a fifth rise in November would be tightening into a slowdown the bank's August forecasts did not anticipate. Monetary policy works with a lag of a year or more. Four rises are already in the pipe, the September one has barely landed, and the inflation the bank is fighting is dominated by petrol and diesel prices set in the Strait of Hormuz rather than in Australian wage bargains. Treasurer Jim Chalmers himself attributes the latest lift in inflation to the Middle East war, and an imported fuel shock is the opposite of the wage spiral a central bank raises rates to break.
The case for one more move rests on a single data point: the 28 October CPI. If the quarterly print shows trimmed mean inflation still accelerating, the hawks will say September's jobs figures are noise from a survey the ABS itself says to read with care. If it does not, the bank will have a 4.7 per cent unemployment rate, a falling participation rate and a shrinking part-time workforce to explain at a 15-year-high cash rate. The question for 3 November is whether Michele Bullock's board treats its own 4.5 per cent forecast as a target it has already passed or as a number it is still prepared to overshoot.
The Semaform
Australia's unemployment rate was 4.7 per cent in September, the highest since October 2021, as employment fell by 39,300 and participation slipped to 66.8 per cent, the ABS reported on 15 October.
The labour market has already passed the Reserve Bank's year-end forecast, four rate rises are still working through, and the inflation being fought is an imported fuel shock. A fifth rise in November would be tightening into a slowdown.
Westpac, EY and BetaShares still expect a November hike because price pressures remain broad, and the ABS itself cautions that September's seasonally adjusted figures may carry residual survey effects; JP Morgan and CBA now expect a hold.
Sources
- Australian Bureau of Statistics, Labour Force, Australia, September 2026, 15 October 2026
- Reserve Bank of Australia, Statement on Monetary Policy, August 2026
- Nine News, Unemployment shock as jobless rate hits five-year high, 15 October 2026
- ABC News, Unemployment remains at 4.7pc in September with interest rate hike possible, 15 October 2026
- Westpac IQ, September Labour Force Preview, 8 October 2026
- Sox News, RBA Raises Cash Rate to 4.60%, Highest in 15 Years, 29 September 2026
- ABC News, RBA hikes cash rate to 4.6 per cent in fourth rate rise of 2026, 29 September 2026
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