Labour market strength dims prospects for near-term RBA rate cuts
Australia’s unemployment rate declined to 4.3% in October, marking a reversal of the increase seen in September, when the rate had risen to 4.5%. The October figure matches the levels recorded in June, July, and August.
According to the latest figures from the Australian Bureau of Statistics (ABS), the number of unemployed individuals dropped by 17,000, while employment increased by 42,000 over the month.
Full-time employment accounted for the majority of this growth, rising by 55,000.
Female full-time employment increased by 29,000 and male full-time employment by 26,000. In contrast, part-time employment fell by 13,000, mainly due to a reduction of 21,000 in female part-time roles, partially offset by an 8,000 increase among males.
The participation rate remained steady at 67%, with male participation up slightly and female participation down by the same margin. The employment-to-population ratio was unchanged at 64%, and hours worked rose by 0.5% in October.
Analysts suggest that the data supports the Reserve Bank of Australia’s (RBA) view that labour market conditions “remain a little tight” and are consistent with the central bank’s forecast for the fourth quarter.
The figures are not expected to influence the RBA’s upcoming monetary policy decision, with most market participants anticipating no change to the cash rate in December.
Commenting on the latest ABS figures, Ivan Colhoun, chief economist at CreditorWatch, noted the significance of the reversal in the unemployment rate.
“The RBA governor’s caution about over-interpreting any one month’s labour force signal has been revealed to be extremely wise as the unemployment rate reversed last month’s increase from 4.3% to 4.5%, falling back to 4.3% in October,” he said.
“Other aspects of the report were also strong. These developments mean there will be no further interest rate cut on the horizon any time soon given the Q3 inflation surprise.”
Major bank NAB has updated its cash rate outlook, now expecting no additional RBA rate cuts during this cycle. Previously, the bank had forecast one further reduction in May 2026.
This adjustment comes after CBA revised its own forecast in late October, indicating it no longer anticipates further RBA cuts in light of the significant increase in September quarter inflation.
ANZ continues to project a single rate cut by the RBA in February next year, while Westpac maintains its expectation of two further reductions in May and August 2026.
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