'There are indicators where the labour market has become less tight a bit faster than we might have forecast'
Australia's labour market appears to be loosening faster than expected, according to the Reserve Bank of Australia (RBA), as the unemployment rate climbed to a near five-year high in September.
Data from the Australian Bureau of Statistics (ABS) last week revealed that the country's unemployment rate went up to 4.7% in September 2026, the highest since October 2021.
ABS data showed that total employment fell by 39,300 to 14,782,000 people, while the total number of unemployed workers climbed by 8,900 to 732,000 people.
September's unemployment figures appear to be closer to the RBA's unemployment forecast for the end of 2027.
The RBA previously predicted that unemployment would hit 4.5% in December 2026, before climbing to 4.6% in June 2027, and then hitting 4.7% in December 2027.
It further predicted that unemployment would reach 4.8% in the June and December 2028 quarters.
Commenting on the latest unemployment figures, RBA Assistant Governor Christopher Kent said during a fireside chat at the Commonwealth Bank's Global Markets Conference that monthly numbers have "always been volatile."
"But even having said that, there are indicators where the labour market has become less tight a bit faster than we might have forecast," Kent said.
"And I think a really important question here, is that because demand is weakening maybe a bit more than you might have thought for labour? Or is it because are there still these pressures in terms of costs of labour still rising too greatly?"
Kent noted that a partial reading and a potential update to the forecasts will come in once inflation data is revealed this week.
"Let's see how they view also the inflation data, and it's important to put those two pieces of the puzzle together. That's what we'll be doing when we update our forecasts," he added.
Australia's rising unemployment rate comes in the wake of recent warnings from businesses and unions of a further increase due to the RBA's move to raise interest rates to a 15-year high of 4.6%.
James Keene, managing director for Asia-Pacific at Employment Hero, previously warned that further pressure on borrowing costs could make employers "far more cautious about hiring and investment."
