New unemployment forecast follows warnings from employers and unions on further rate hikes
Australia's unemployment rate is expected to peak at 4.9% in 2027-28, according to a new Deloitte forecast, amid elevated inflation and an anticipated cash rate increase.
The latest Deloitte Access Economics Business Outlook suggested that the country's unemployment rate will rise to 4.8% in 2026-27.
It will peak at 4.9% in 2027-28, according to Deloitte, before eventually easing to 4.7% in 2028-29.
Australia's current unemployment rate sits at 4.6% as of August 2026, rising from 4.5% in July.
Deloitte's unemployment forecast comes in the wake of previous warnings from business groups and unions that a further increase in interest rates could push up unemployment.
James Keene, managing director for Asia-Pacific at Employment Hero, previously warned that further pressure on borrowing costs could make businesses "far more cautious" about hiring and investment.
"In turn, jobseekers are left facing a less certain market," Keene said.
The Australian Council of Trade Unions (ACTU) also warned that raising interest rates puts workers' hours and even their employment at risk.
"We already have 723,000 unemployed in the country, and that number shouldn't go any higher," said ACTU secretary Melissa Donnelly in a previous statement.
Growth forecasts downgraded
Deloitte said it is expecting the Reserve Bank of Australia to lift the cash rate by another 25 basis points in November, taking it to 4.85%.
Its unemployment forecast forms part of a broader outlook in which it downgraded its growth forecasts for a second consecutive quarter.
In the September 2026 edition of Business Outlook, Deloitte forecast Australia's economic growth at 1.7% in 2027-28, down from 1.9% in the June edition.
It also cut its growth forecast to 2.1% in 2028-29, down from 2.2% previously.
Stephen Smith, Deloitte Access Economics partner and author of the report, said Australia's economy is increasingly reliant on a larger population rather than a more productive workforce.
"Between the 1990s recession and the 2008 financial crisis, economic growth per hour worked – a measure of labour productivity – increased at an average annual rate of 2.0%. That compares to average annual growth per hour worked of just 1.2% between 2008 and the pandemic," Smith said.
He said that the quality of growth prior to the onset of the pandemic "has since all but vanished," with the economy today being smaller, measured per hour worked, than it was at the end of 2019.
"Increasingly, Australian economic growth has been achieved by adding more people to the economy rather than making each worker more productive. In short, Australia has mistaken a larger economy for one which is more prosperous," he said.
Smith, however, pointed out that this is not an argument against population growth, but noted that it is also not an alternative to productivity growth.
"It sustainably strengthens an economy only when paired with adequate housing supply, faster planning approvals, deeper capital investment, timely infrastructure delivery, stronger competition, better skills formation and greater business dynamism," he said.
"Without that pairing, population growth means the harder disciplines of allocating capital well or forcing firms to compete harder for customers and workers are not imposed."
What Australia needs now is reforms that can lift productivity, according to Smith.
"The policy priority is therefore the supply side. Australia needs reforms that lift productivity, accelerate housing and infrastructure delivery, broaden business investment and translate AI adoption into higher output per worker. Such reforms are no longer optional," he said.
