Nation sheds 56,500 full-time jobs in a month, giving RBA a headache
By Shane Wright
The Reserve Bank has been given a fresh warning that a lift in interest rates could drive up unemployment after new figures revealed weakness across the jobs market.
Two days after the Reserve signalled it could start lifting interest rates as soon as February, the Australian Bureau of Statistics on Thursday revealed the country shed 56,500 full-time jobs last month.
A sharp fall in full-time employment has given the Reserve Bank some pause for thought over interest rate movements.Credit: Louise Kennerley
Full-time jobs fell in all but South Australia with NSW alone losing 33,900.
Only a 0.2 percentage point drop in the participation rate - which tracks those in work or looking for it - prevented the overall jobless rate from increasing from 4.3 per cent.
If the participation rate were at its early 2025 peak, the jobless rate would be approaching 5 per cent.
Jobs growth has now slowed to 1.3 per cent over the past year, its lowest rate outside of the pandemic since 2017 and well short of overall population growth.
Job ads and vacancies have also continued to slow. The most recent ANZ-Indeed measure of job ads fell by 0.8 per cent in November, its seventh fall in the past 8 months.
Bankwest Curtin Economics Centre labour economist Michael Dockery said the jobs figures were sending mixed signals to the Reserve Bank.
“The sharp fall in the number of full-time jobs suggest the labour market is continuing to soften. However, it also provides a glimmer of hope for mortgage holders that a rise in interest rates early in the new year might not be a fait accompli,” he said.
The state of the jobs market and the federal budget are looming as key issues in the direction of interest rates next year.
Next week, Treasurer Jim Chalmers will release the mid-year budget update, revealing a sharp lift in expected spending across a series of key areas over the next four years.
Expenditure on natural disaster relief, which can take years to filter through the federal budget, is expected to be up $6.3 billion on the March budget forecast.
Spending on the age pension is expected to be $3 billion above March estimates while $2.1 billion more will be spent on defence superannuation benefits.
There has been another blowout in the cost of assistance to veterans, with an additional $1.3 billion needed to cover health care services. That’s on top of $15.2 billion extra that the government has spent on veterans since taking office.
Chalmers signalled the budget, which he forecast in May to show a $42.1 billion deficit, was a balancing act between spending and revenue pressures.
“The biggest job in the mid-year update has been making room for unavoidable pressures and payments without a substantial deterioration in the bottom line,” he said.
“While we’ve already delivered a substantial improvement to the bottom line, estimates variations across a range of areas are putting considerable pressure on the budget.”
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