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The unemployment rate is at its highest level since late 2021. (Steven Siewert)<\/p>\nT\ufeffhe unemployment rate has reached its highest level in almost four years following a surprise jump in the number of people looking for work last month, increasing the chance of a pre-Christmas interest rate cut.<\/p>\n
According to data released by the Australian Bureau of Statistics this morning, the jobless rate hit 4.5 per cent in September, up from a revised 4.3 per cent the month prior (the ABS had originally said the August figure was 4.2 per cent).<\/p>\n
The result is worse than economists had forecast, with the market expecting a rise to 4.3 per cent today.<\/p>\n
The unemployment rate is at its highest level since late 2021. (Steven Siewert)<\/p>\n
“This is the highest seasonally adjusted unemployment rate recorded since November 2021,” ABS head of labour statistics Sean Crick said.<\/p>\n
“There were 34,000 more unemployed people in September. The number of employed people also grew, up 15,000 in the same period.\ufeff”<\/p>\n
The \ufefffresh data comes three weeks out from the Reserve Bank’s next interest rates decision, to be handed down on Melbourne Cup day, November 4.<\/p>\n
Harry Murphy from Oxford Economics Australia said the surprise rise in unemployment has put the central bank in a difficult position, but that a rate cut next month is now justified.<\/p>\n
\ufeff”The RBA is increasingly caught between a rock and a hard place,” he said.<\/p>\n
“Its dual mandate \u2013 price stability and full employment \u2013 is now pulling in opposite directions.<\/p>\n
“Inflation looks set to come in hotter than the bank’s latest forecasts, while the labour market is weaker than expected. Each development warrants different policy responses.<\/p>\n
“We maintain that the recent inflation uptick is temporary and expect underlying pressures to keep easing…<\/p>\n
“With unemployment moving in the other direction, we maintain our view that a rate cut is warranted in November, with a final cut this cycle in quarter one next year.”<\/p>\n
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RBA Governor Michele Bullock has hinted that there may be more room for interest rates to be reduced. (Louise Kennerley)<\/p>\n
While expectations for a pre-Christmas cut have dwindled on the back of higher-than-expected inflation data in recent months, RBA Governor Michele Bullock hinted that there was still room for the cash rate to drop in comments made in the United States overnight.<\/p>\n
“We don’t think (monetary) policy is restrictive, but we don’t think it’s accommodative,” she said.<\/p>\n
“We think it is marginally tight.<\/p>\n
“It’s probably a little on the tight side but not much.”<\/p>\n
The ABS will publish crucial quarterly inflation data in two weeks, which is set to have a crucial influence on the RBA’s November and December decisions.\ufeff<\/p>\n