Australian jobs: Unemployment rises to 4.5 per cent for September

A November call on interest rates is set to go down to the wire as the Reserve Bank faces the threat of dual hits from rising unemployment — the worst in four years — and hotter inflation.

Australia’s jobless rate jumped lifted from 4.3 per cent to 4.5 per cent in September, a bigger lift than had been expected and the highest level since 2021.

Employment also increased by 14,900 roles as the country’s population and labour force grew.

The Reserve Bank will be squeezed by the jobs market softening just as concerns about cost of living resurface.

Inflation figures due at the end of the month will become the deciding factor before the RBA board meets on Melbourne Cup Day.

VanEck head of investments Russel Chesler declared Thursday’s jobs numbers not “a cause for concern just yet”.

“It is really too soon to tell whether the labour market is in danger from just one month’s worth of data,” he said.

“What we do know is that the unemployment rate has been in a tight range for more than four years, and it continues to be at historic lows overall.

“To put it into perspective, the unemployment rate 10 years ago was considerably higher at 6.2 per cent.”

Also thinking borrowers would be waiting was Commonwealth Bank’s Belinda Allen, tipping a final cut in February.

“There is tension in the data . . . inflation has been a little stronger and consumer spending is rising but . . . the unemployment rate has risen more than expected,” she said.

“There is debate whether stickier inflation or slower employment is temporary.

“Until this is resolved we expect the cautious nature of the RBA cutting cycle to date to remain in place.”

Yet KPMG chief economist Brendan Rynne argued the weaker jobs figures should tip the RBA over the edge for November cut.

It comes after the Reserve Bank this week warned the economy was looking stronger than expected thanks to renewed consumer spending.

Speaking in Washington before the shock jobs data was released, RBA boss Michele Bullock said interest rates were “marginally tight” — implying there’s a little more room to cut rates but no rush to do so.

She said the RBA wanted “time to think” after recent data showed the economy was turning for the better and inflation may be higher than expected.