Unemployment has reached 4.7% and its highest in nearly five years, slashing the chance of another Reserve Bank interest rate hike as the economy unexpectedly shed jobs in September.
The Australian Bureau of Statistics data showed the total number of employed Australians dropped by 39,300 jobs in the month, a surprise for economists who had expected employment to rise by 20,000.
Brendan Rynne, the chief economist at KPMG, said the latest jobs report “reinforces the view that the Australian economy is losing momentum”.
With Jim Chalmers, the treasurer, in Bangkok for meetings with G20 finance ministers, shadow treasurer Tim Wilson attacked the government for its economic management.
“The consequences of the Albanese economic model are now laid bare for everybody to see: higher unemployment, higher taxes, higher spending, higher inflation, and higher interest rates,” Wilson said.
Prime minister Anthony Albanese, in parliament, argued Australia’s unemployment remained low by historical standards.
“This government has the lowest unemployment rate of any government in 50 years,” he said.
The ABS figures would have shown the jobless rate ticking higher last month had it not revised up the August figure from 4.6% to 4.7%. Unemployment started the year at 4.1%.
Full-time employment increased by 34,400 in September, but this was more than offset by a sharp drop in part-time employment of 73,700.
Signs that the labour market is deteriorating more quickly than anticipated lowered the chance of an RBA interest rate hike on Melbourne Cup day.
Pricing in financial markets showed the probability of a rate rise on 3 November dropped to below 20% following the latest figures, from about 35% earlier this morning, according to Bloomberg.
But economists were more circumspect, warning it was too early to rule out a fifth rate hike for the year.
KPMG’s Rynne said he still believes the nation is heading for a Melbourne Cup day rise.
“While today’s numbers show a slowing in the labour market, it is unlikely to be considered sufficient to take enough demand out of the economy to slow inflation and bring it back to the 2.5% target level anytime soon,” he said.
Krishna Bhimavarapu, an economist at State Street Investment Management, said the “hurdle” for another rate hike had “risen materially” after the latest jobs numbers.
“But we would not take further tightening off the table,” Bhimavarapu said.
Underemployment, which includes those with jobs but trying to find more work, lifted to 6.3% in September, from 6.2%.