Australia’s Unemployment Hits Four-Year High, Boosting Expectations for RBA Rate Cut

Economy

AUSTRALIA: Australia’s unemployment rate unexpectedly jumped to a near four-year high of 4.5% in September, as more people entered the labor market, a weak outcome that has reignited expectations of further policy easing.

Following the data, investors sharply increased bets on a Reserve Bank of Australia (RBA) rate cut in November, with the probability rising to 72% from 40% prior to the report. Optimism for easing had previously waned amid concerns over persistent inflation and a strong rebound in consumer spending. The Australian dollar fell 0.2% to $0.6497, while three-year bond futures gained 10 ticks to 96.62. Heightened expectations of a rate cut also helped push the local stock benchmark (.AXJO) to a record high.

Data from the Australian Bureau of Statistics showed net employment rose by 14,900 in September, following a revised 11,800 decline in August, falling short of market expectations for a 20,000 gain. The unemployment rate, at 4.5%, is the highest since November 2021 and exceeded forecasts of 4.3%, the peak anticipated by the RBA.

The central bank noted that monthly jobs figures are volatile, but overall employment growth has slowed sharply this year, rising just 1.3% in September compared with 3.5% in January.

Source: Reserve Bank of Australia