Unemployment continues to rise Down Under, reinforcing expectations that the Reserve Bank of Australia's (RBA) is poised to lift interest rates again at its November meeting.
The Australian Bureau of Statistics (ABS) released its latest jobs report on Thursday, revealing that unemployment in Australia was 4.7% in September, up from 4.6% in August, and 4.5% the month before, on a seasonally-adjusted basis.
Meanwhile, the national participation rate in September edged up to 66.8%, compared with 67.1% in August.
By state, Victoria continued to have the highest unemployment rate at 5.1%, followed by Tasmania at 5%, New South Wales at 4.7% and Queensland at 4.5%. South Australia and Western Australia had the lowest levels at 4.2%.
The nation's central bank has raised interest rates four times this year, bringing the official cash rate (OCR) to 4.60%.
While widely-expected, the news was met with dismay by mortgage holders, investors and businesses nationwide. Many are already struggling with the rising cost of living, persistent inflationary pressures, stagnant wage growth, a housing shortage, falling property prices and broader market uncertainty.
"People are feeling annoyed and quite rightly, that the cost of everything is rising, that their wages are not keeping pace with that. I understand all those sentiments," RBA Governor Michele Bullock told reporters after the September meeting on monetary policy.
The governor added that the bank considered both a hold and a rate hike at the most recent meeting, but ultimately that a hike was necessary to control inflation. The RBA has made it clear that it will not begin cutting interest rates until inflation is back within the target band of 2% to 3%.
Bullock explained that many of the upside risks to inflation that the board has previously been monitoring — including the conflict in the Middle East, rapid AI boom and capacity pressures and high demand, which are putting upward pressure on inflation — remain concerning.
At the September meeting, Bullock also left the door open to further increases, saying, "if that's what's needed to get inflation down. [In terms of] inflation, we have been outside of our target for six years. We've got to slow the rate of growth and demand down. And our instrument is the interest rate."
However, she also acknowledged the frustration facing mortgage holders, saying, "I know they don't understand [the rate rise decision.] But if we don't address this. inflation will get worse. I don't know if this [current interest rate level] is the new normal. But I do know that we're not going back to interest rates of zero, or near zero."
In addition, Bullock commented on the potential flow-on effects of higher interest rates on the broader economy, including the risk of job losses. "I don't like the idea of job losses," she said.
While the meeting struck a decidedly dovish tone, with market participants suggesting the RBA board appeared to place equal weight on inflation and economic growth, the minutes released later painted a more hawkish picture, reinforcing the central bank's determination to bring inflation back under control.
The latest consumer price index (CPI) didn't help tame market fears either.
The August print revealed that both headline CPI and trimmed mean inflation are still above the RBA's target inflationary range, and in some cases rising. In the 12 months leading up to August, headline CPI rose to 4.0%, up from 3.5% in the year to July. Trimmed mean inflation remained unchanged at 3.6%, the same as in June and July.
The RBA's next meeting on monetary policy is scheduled for 2 and 3 of November.
More to come.
