September labour force data: Unemployment holds at 4.1 per cent in bad news for rates

The Australian economy has added tens of thousands of new jobs, reducing the likelihood of a rate cut in the coming months.

The unemployment rate held steady at 4.1 per cent in September, in line with the revised figure for August, according to seasonally adjusted data released today by the Australian Bureau of Statistics (ABS).

This is bad news for mortgage holders looking for a stronger signal of a rate cut later this year.

Oxford Economics Australia head of macroeconomic forecasting Sean Langcake said Thursday’s job figure will likely push the time out for Australia’s first rate cut.

“These data are not strong enough to provoke a rate hike from the RBA. But, we do think they support our view that a rate cut is further away than the market currently thinks. We still see the first RBA rate cut coming in Q2 2025,” Mr Langcake explained.

The economy added 64,100 jobs last month, the Australian Bureau of Statistics reported on Thursday, significantly more than the 25,000 economists expected. The unemployment rate held at 4.1 per cent, below analysts’ estimates.

Unemployment unexpectedly holds, which is bad news for homeowners wanting a rate cut this year. NCA NewsWire / Nikki Short

Despite the slight fall in the number of unemployed people, the strong rise in employment saw the participation rate rise by 0.1 percentage point to a record high of 67.2 per cent.

Jobs growth remained remarkably strong over the past year, defying a marked slowdown in economic growth.

According to Mr Langcake “labour demand is being met with additional supply, evidenced by the participation rate and employment-to-population ratios breaking through to record highs in recent months,” he said.

The ABS’ figures show employment has risen by 3.1 per cent in the past year, growing faster than the civilian population growth of 2.5 per cent.

“This has contributed to the increase in the employment-to-population ratio by 0.1 percentage point, and 0.4 percentage points over the past year, to a new historical high of 64.4 per cent,” Bjorn Jarvis, ABS head of labour statistics said.

“The record employment-to-population ratio and participation rate shows that there are still large numbers of people entering the labour force and finding work in a range of industries, as job vacancies continue to remain above pre-pandemic levels.

The economy added 64,100 jobs last month, the Australian Bureau of Statistics reported on Thursday. Picture: NewsWire / Nikki Short

While the number of unemployed people fell slightly to 616,000 in September, over the last 12 months there are signs of weakness.

The ABS said there are 90,000 more unemployed people this year compared with September 2023.

“Even with the rise over the last year, there are still around 93,000 fewer unemployed people than there were just before the start of the COVID-19 pandemic, when the unemployment rate was at 5.2 per cent,” Mr Jarvis said.

The results were better than expected, with Treasury stating the current government is the only government to create one million jobs in a single parliamentary term.

Labor said they would be carefully watching the figures in anticipation of whether it had overseen the creation of a million new jobs since they took government.

“We welcome the fact that the majority of these million new jobs are full time and around half are for women, Treasurer Jim Chalmers said.

“We’re all about more people working, earning more and keeping more of what they earn and this shows we’re making good progress.”

Originally published as September labour force data: Unemployment holds at 4.1 per cent in bad news for rates