According to the latest Australian Bureau of Statistics (ABS) Labour Force Survey, the seasonally adjusted unemployment rate increased from 4.3 per cent to 4.5 per cent, exceeding market expectations of a more modest rise to 4.3 per cent.
The participation rate also increased to 67.0 per cent, contributing to the higher unemployment figure despite modest job growth.
Employment increased with 15,000 new positions added, split between 8,700 full-time and 6,300 part-time roles.
Oliver Hume Chief Economist, Matt Bell, said the surprising jump will force the Reserve Bank of Australia to reconsider its rate cut timeline.
“A surprise jump in the unemployment rate to 4.5 per cent will give the RBA a lot to think about and probably has November and December rate cuts back on the table,” Mr Bell said.
Despite reaching its highest level in nearly four years, the unemployment rate remains historically low, which continues to support wage growth and household incomes.
The latest figures show the monthly hours worked increased to 1,987 million, while the underemployment rate rose to 5.9 per cent, further indicating some softening in labor market conditions.
Mr Bell said that the property market is unlikely to be negatively affected by this development, with preliminary data showing strong activity continuing in the new land sales sector.
“We shouldn’t forget it’s still a low unemployment rate in historical terms, good for wage growth and household incomes, and while unexpected, a rise to 4.5 per cent isn’t likely to dampen the recovery we’ve seen in new and established property markets to date,” he said.
The unemployment rate now sits slightly above the RBA’s forecasts from August, putting additional focus on the upcoming September quarter inflation figures due on October 29th, which will heavily influence the RBA’s November decision.
August’s employment figures were also revised downward, with the previously reported job losses of 5,400 now adjusted to 11,900, painting a weaker employment picture than initially thought.
For the property market, these developments could accelerate the easing cycle, potentially improving affordability through lower mortgage rates in the coming months.
“Preliminary results for new land sales in September quarter show that rate cuts so far have seen strong June quarter activity repeated, and we expect this to continue into the end of 2025, regardless of the November and December rate decisions,” Mr Bell said.
