Australia’s jobless rate fell last month even as employers shed almost 40,000 full-time positions, sending mixed signals as to the need for another Reserve Bank interest rate rise to cool the economy.
The unemployment rate was 3.6% in September compared with a reported 3.7% in August, the Australian Bureau of Statistics said on Thursday. Economists had forecast the jobless level would remain unchanged at 3.7%.
The economy added a net 6,600 jobs, although employers reduced full-time positions by 39,900. Consensus forecasts had predicted the workforce would swell by 20,000 jobs.
The swing factor was the drop in the participation rate, easing 0.2 percentage points to 66.7% from record levels. Hours worked also contracted to 1.93bn.
“The fall in the unemployment rate in September mainly reflected a higher proportion of people moving from being unemployed to not being in the labour force,” Kate Lamb, the bureau’s head of labour statistics, said.
“Looking over the past two months, average monthly employment growth was 35,000 people, around the average growth we’ve seen in the past year.”
The RBA has left its key interest rate unchanged for four months as it assesses whether the record run of 12 rate increases between May 2022 and June this year are enough to quell inflation.
According to its estimates in August, inflation will return to the bank’s preferred 2-3% by June 2025. The central bank has also tipped the jobless rate rising to 4% by the end of 2023 although it will release revised estimates on 10 November.
The treasurer, Jim Chalmers, hailed the numbers as “a very welcome result”, with the tally of jobs created in the economy since May last year now reaching a net 561,500.
“This is the most jobs created in the first term of any government on record, and we’re only halfway through the term,” Chalmers said. Since the ABS began releasing monthly jobs figures, only 19 months had been in the 3% range, with 16 of them coming since Labor took office.
The immediate market reaction was a slide in the Australian dollar below 63.0 US-cents mark from above 63.3, implying traders had pared expectations of another RBA rate rise. Stocks trimmed losses for the day to be about 1.2% lower by early afternoon.
“The recent softening in hours worked, relative to employment growth, may suggest an easing in labour market strength, though it also follows particularly strong growth over the past year,” Lamb said.
With 400,000 job vacancies as of August, the labour market remained “relatively tight and resilient”, she said.
Tapas Strickland, head of market economics for Nab, said the spread of numbers made it a “dog’s breakfast” to interpret. The actual jobless rate came in at 3.557%, implying a 10% drop in the month.
Anz said the numbers pointed to a labour market that was cooling.
“For the RBA we’d see this as a result broadly in line with expectations,” Adam Boyton, ANZ’s head of Australian economics, said. “That puts the focus squarely on the CPI next [Wednesday] ahead of what looks to be a live RBA Board meeting in November.”
David Bassanese, chief economist for Betashares, noted aggregate hours worked had slid 0.9% in the September quarter, reversing some of the 2.9% gain in the June quarter.
“All up, today’s report is not the type of ‘red flag’ the RBA would need to see to justify a rate hike at the November policy meeting,” Bassanese said.
Among the states, New South Wales and Western Australia had the lowest unemployment rate at 3.3%, with the former dropping from 3.6% in August and the latter down sharply from 3.8%. Queensland also improved from 4.1% to 3.9% with Victoria steady at 3.5%.
The Australian Capital Territory lost its nation-leading status, with the jobless rate climbing from 3.1% to 3.9%, seasonally adjusted.
A separate business survey by NAB found labour costs rose 1.8% in the September quarter from the previous three months. About 40% of firms said labour availability remains a “significant constraint”.
However, the survey found fewer companies expect “significant wage pressures in the next six months, suggesting the peak in wage pressure may have occurred” in the quarter just ended.
“For now, labour demand seems to be keeping pace with the strong rebound in population although we expect the labour market to gradually ease over time,” Alan Oster, NAB’s chief economist, said.
On other measures, “business conditions remained robust and forward orders edged back into positive territory”, the survey said.
