Jobless rate lifts to 3.7 per cent but RBA still under gun

The unemployment rate lifted back to 3.7 per cent in October despite the creation of a bumper 55,000 jobs in the month, underlining the ongoing resilience of the labour market.

Some of the heat is coming out of the jobs market. Picture: David Swift / NCA NewsWire

The unemployment rate lifted back to 3.7 per cent in October despite the creation of a bumper 55,000 jobs in the month, underlining the ongoing resilience of the labour market as the Reserve Bank mulls whether its needs to do more to slow the economy.

Analysts said there was some evidence that the hottest jobs market since the early 1970s was beginning to cool, however, with employers less willing to give their staff hours and unemployment among younger Australians pushing firmly higher.

In contrast to the wider jobless rate, which has remained at around 50-year lows since mid-2022 despite the drag from 13 rate hikes and intense cost-of-­living pressures, youth unemployment jumped from 8 per cent to 9.2 per cent in October, to be substantially higher than the low of 7.1 per cent in July last year.

Barrenjoey chief economist Jo Masters said younger workers – who are often employed casually and in low-skill jobs – tended to be the canaries in the coalmine of a slowing economy, and demand for labour was starting to roll over.

Despite the essential resilience on display in the latest employment numbers, Ms Masters said “there are some signs that we may be at a turning point”.

“Jobs growth is increasingly being driven by part-time jobs. Hours worked is stalling and basically back at March levels,” she said.

The Australian Bureau of Statistics figures showed full-time employment rose by 17,000 in October, while part-time employment increased by 37,900.

The pace of jobs growth in Oct­ober was more than double the consensus analyst forecast for a 24,000 rise, and some observers said the hiring related to the voice referendum may have contri­buted to the unexpectedly strong result.

The underemployment rate – which measures those with jobs but who want to work more hours – was steady at 6.4 per cent in September, according to the seasonally adjusted data.

The tick higher in the jobless rate from 3.6 per cent in the September – despite the robust lift in the number of employed Australians – was the result of a rise in the workforce participation rate back to a historical high of 67 per cent in the latest figures, from 66.8 per cent.

KPMG chief economist Brendan Rynne said “today’s data provides some signals that the labour market is returning back to its natural level, albeit slowly – and slower than the RBA has been predicting”.

Dr Rynne said the latest evidence of a tight labour market, married with Tuesday’s data showing a record jump in quarterly wages growth, “is unlikely to be helpful for the RBA (which is) looking for reasons to pause further increases in the cash rate”.

“The December cash rate decision will therefore be highly contingent on the degree of stickiness in the inflation rate, which we will see in the week before the next meeting,” he said.

The 0.4 per cent increase in employment was matched with a 0.5 per cent lift in hours worked, and experts said the cooling of the hot jobs market was more evident in a slowdown in the growth in the number of working hours than in the headline jobless figure, which is at its lowest since 1974.

Westpac economist Ryan Wells said “in essence, employers are less willing to provide hours but are not yet materially reducing their workforce”.

“At this turning point in the ­labour market, we expect this ­dynamic will continue, with more weakness coming out of hours worked relative to employment over the coming months,” Mr Wells said.

The latest jobs numbers come after wages data on Wednesday showed worker pay jumped by 1.3 per cent in the September quarter – a record in a series stretching back to 1997 – as employees on award wages and in the aged-care sector received big increases to their minimum pay.