Australia’s unemployment rate showed a positive decline in October, falling to 4.3% after a rise in September. The data reassures economists and policymakers that the job market remains resilient, despite broader global economic uncertainties.
Employment Gains and Unemployment Decline
In October, Australia saw an increase of 42,200 employed people, contributing to a dip in the unemployment rate from 4.5% in September to 4.3%, reports ABC. This marks a return to the unemployment level seen earlier in the year, around June, July, and August. The drop in unemployment is further supported by a decrease of 17,000 in the number of people without work.
Economists were quick to point out that September’s brief uptick in the unemployment rate might have been more of a statistical blip than a trend, reinforcing the idea that the job market is still relatively healthy. According to BDO’s chief economist, Anders Magnusson, this month’s figures confirm that October’s results are aligned with a solid labour market performance.
What Does This Mean for Unemployment and Interest Rates?
The strong employment figures suggest that any hopes of an interest rate cut in the near term have been dashed. David Bassanese, Chief Economist at BetaShares, pointed out that the results have removed the possibility of an unexpected rate cut by the Reserve Bank of Australia (RBA) at its final meeting of the year. Although interest rate cuts aren’t expected immediately, rates could potentially decrease next year if inflation pressures ease, or if the economic slowdown intensifies more significantly.
Federal Treasurer Jim Chalmers called the decrease in unemployment a “very positive result” and praised the creation of 1.2 million jobs during the current government’s tenure. However, economists caution that even with this positive data, the RBA will likely remain cautious, as the economy remains “tight,” limiting its room to ease monetary policy.
Slowing Employment Growth
Despite the overall positive trend, the pace of employment growth has started to slow down. Annual employment growth in October was only 1.6%, a significant drop from the 325,000 people employed in the same period last year. This slowdown is largely attributed to fewer hiring opportunities in key sectors like healthcare and social assistance, which had been major job creators post-pandemic.
Callam Pickering, an economist at Indeed, noted that the private sector hasn’t yet been able to fill the gap created by reduced hiring in the public sector. While sectors like healthcare are still adjusting, this lag in private sector hiring could affect job creation in the coming months.
Underemployment Declines
A bright spot in the October data was the drop in underemployment, which measures those working part-time but wanting full-time hours. The underemployment rate fell by 0.2 percentage points to 5.7%, signaling a small but positive improvement in the quality of employment for many Australians. This could indicate that while job growth might be slowing, those who are employed are finding more stable and permanent roles.
Looking ahead, economists believe the RBA’s forecast of a 4.4% unemployment rate by the end of 2026 remains on track. This slight increase from the 4.3% figure signals a stable yet cautious economic outlook for the next year. While employment levels are positive, the slowdown in job creation, especially in the healthcare sector, suggests that the economy may not be able to sustain rapid growth for much longer.
In the short term, however, Australians can take some comfort in the stability of the labour market, even as growth begins to moderate. Whether the RBA will be able to adjust interest rates next year will depend largely on inflationary trends and broader economic conditions, which will require careful monitoring.
