Australia’s employers added more jobs than expected last month as the economy’s resilience contributed to a tight labour market – keeping open the possibility of another Reserve Bank interest rate rise.
The unemployment rate rose in October to 3.7%, with a net 54,900 jobs added for the month, the Australian Bureau of Statistics reported on Thursday. Of those, 17,000 were full-time positions.
Market economists had predicted the jobless rate would rise to 3.7% from September’s reported 3.6% level but with just 24,000 jobs to be added.
The participation rate, which tracks the share of the population in work or looking for it, bounced 0.2 percentage points back to its record 67%.
However, Bjorn Jarvis, the ABS’s head of labour statistics, said other measures, such as hours worked, showed some easing. October’s job jump followed an 8,000 gain in September.
“Looking over the past two months, these increases equate to average employment growth of around 31,000 people a month, which is slightly lower than the average growth of 35,000 people a month since October 2022,” Jarvis said.
The annual growth in hours slowed to 1.7%, down from about 5% in the middle of the year, and less than the annual employment growth of 3%, he said.
The jobs figures follow Wednesday’s ABS release showing the wage price index had risen 1.3% in the September quarter, the largest quarterly increase in the survey’s 26-year history. The annual pace of 4% was also the most in more than 14 years.
The strength of the underlying economy prompted the RBA to lift its forecast last week for gross domestic product growth. It also predicted the jobless rate would rise to about 4.3% by next June, less than a previously forecast peak of about 4.5%.
Prior to Thursday’s labour market figures, investors had rated the chance the RBA would follow this month’s interest rate rise with another in December as less than 10%. They were also betting the odds of an interest rate increase next year at less than a 50-50 chance, according to the ASX.
In the immediate wake of Thursday’s data, the dollar was slightly lower, trading at just over the 65 US-cent mark. Stocks were holding on to losses of about 0.25% for the day.
Stephen Wu, a senior CBA economist, noted the October jobs figures were boosted by a “temporary effect on employment, hours and participation” from the Aboriginal and Torres Strait Islander Voice referendum held on 14 November.
“Given that, we could expect some payback next month, perhaps more so in employment, given that was stronger than expected,” Wu said, adding that the October consumer price index figures for October “will be the one to watch” in terms of data releases before the 5 December RBA board meeting.
Warren Hogan, chief economic advisor at Judo Bank, said the jobs figures were “amazing” and evidence of an economy “operating beyond its capacity”.
Researchers would be studying “an economic experiment for years to come” as Australia continued to absorb a surge in job seekers as the population swells, he said
Hogan said the chance of 14th RBA rate rise on 5 December was still probably less than 50:50 but the bank board won’t meet again until February and will hold six-weekly gatherings after that.
“Demand for labour is still very strong,” he said. “We’re not looking at a normal cycle.”
Youth unemployment rose to 8.7% last month, while the total number of unemployed people rose 27,900, reflecting the higher participation rate.
Among the states, New South Wales boasted the lowest jobless rate at 3.4%, seasonally adjusted, up from 3.3% in September. Victoria’s unemployment rate jumped from 3.5% to 3.8%, Queensland’s rose from 3.9% to 4.3%, and Western Australia’s increased from 3.3% to 3.8%. Other states were steady or slightly lower.
