Australia’s unemployment rate jumped to 4.5 per cent in September, up from 4.3 per cent in August, in seasonally adjusted terms.

It is the highest seasonally adjusted unemployment rate recorded since November 2021.

Economists say another interest rate cut from the Reserve Bank is now warranted next month.

“Even allowing for monthly volatility, it’s clear that the pace of employment demand has slowed in recent months,” BetaShares chief economist David Bassanese said.

Unemployment rate steady despite jobs losses in August

Australia’s unemployment rate remains steady at 4.2 per cent in August, despite more than 5,000 jobs being lost last month.

“What’s becoming evident is that the labour market is no longer proving able to find jobs for all that want them, leading to a further lift in the unemployment rate to 4.5 per cent.

“This rate is in line with the Reserve Bank’s base case view of full employment in Australia, so the bank from today could no longer characterise the labour market as tight.”

Data show that the number of officially unemployed people rose by 33,900 in September, and the number of those employed rose by 14,900, with the size of the labour force growing by 48,800 people.

That increase in the labour force saw the participation rate lift by 0.1 percentage points to 67 per cent, back to where it was in July.

In trend terms, which smooths out seasonal noise from the data, the unemployment rate remained steady at 4.3 per cent.

Labour market cooling, not collapsing

BDO chief economist Anders Magnusson said despite the jump in the seasonally adjusted unemployment rate, the labour market was cooling, “not collapsing”.

He said the 14,900 jobs added in September was marginally below the average for new jobs added over the past year.

The increased participation in the labour market suggested that households were still feeling the pressure of rising living costs, with more people being pushed into the labour market, he said.

“Today’s release confirms a continued gradual cooling of the labour market that keeps the RBA on course, rather than forcing its hand,” Mr Magnusson said.

“Hiring activity is slowing, with job advertisements falling by 3.3 per cent in September according to ANZ-Indeed, the biggest monthly drop since February 2024, hinting that employers are becoming more cautious.

“However, with the fundamentals performing as expected, I don’t anticipate a rate cut in November.”