Australia’s labour market remains resilient with jobs data beating estimates and the proportion of people in work or searching for a job rising to a record high.
The Australian Bureau of Statistics reported that the economy added 64,100 jobs through September more than the 25,000 economists expected while the unemployment rate held at 4.1%, below analysts’ estimates despite the participation rate increasing to a record high of 67.2%.
Bjorn Jarvis, ABS head of labour statistics, said: “With employment rising by around 64,000 people and the number of unemployed falling around 9,000, the unemployment rate remained at 4.1%, where it has generally been over the past six months.”
The underemployment rate decreased by 0.1 percentage point to 6.3%, marking a 0.1 percentage point decline from September 2023 and a 2.4 percentage point drop from March 2020.
The underutilisation rate, which combines unemployment and underemployment, fell by 0.2 percentage points to 10.4%, remaining significantly below the 13.9% recorded in March 2020.
IG Markets analyst Tony Sycamore said: “The Australian labour market's remarkable run of strength has extended into September, continuing to defy expectations of cooling.
"Jobs growth has exceeded expectations in seven of the last eight months, with the small fall in March (-4.58k) looking like an anomaly.”
Rate cut is unlikely
Thursday's jobs report reinforces the prevailing view among investors and economists that the RBA is unlikely to reduce interest rates this year. Instead, it points to a possible quarter-point cut at its first meeting in February 2025.
The RBA aims to achieve a "soft landing," which involves bringing inflation back within the 2 to 3% target range without triggering an economic downturn or a significant decline in employment.
While only a single data point, the ABS figures indicate that the economy is moving in that direction.
“The RBA’s forecast for the unemployment rate is for it to rise to 4.3% by the December quarter. If the current trend in the jobs data continues, the unemployment rate appears more likely to find its way back to 4%, where it was in May," Sycamore said.
"Today’s job numbers leave hopes of an RBA rate cut before year-end in tatters.
“Before the jobs data was released, the rates market had priced in 11 basis points of RBA rate cuts by the end of the year and 47 basis points of cuts by May 2025. This has since been pared back to 7bp and 37bp respectively.”
In its August staff forecasts, the RBA projected the unemployment rate would rise to 4.3% by the end of the year, with a further increase to 4.4% expected by mid-2025.
Reflecting continued strength in the labour market, the participation rate—representing the proportion of Australia's working-age population employed or actively seeking work—reached a new record of 67.2%.
Given the strong population growth, primarily driven by surging migration, the economy needs to generate 39,000 new jobs each month to maintain stability in both the unemployment and participation rates.