Fin-X Rapid Response - 16th October

Australian unemployment increased by more than expected in September. The rise was due to higher participation in the labour force rather than job losses. But the rate of new job creation appears to be slowing.

• The unemployment rate increased to 4.5% in September, more than the expected 4.3% on a seasonally-adjusted basis. The August reading was revised higher from 4.2% to 4.3%.

• Trend unemployment remained at 4.3% in August.

• The participation rate increased from 66.8% (revised up to 66.9%) in August to 67.0%, indicating that more Australians joined the labour force, outpacing job gains.

• The economy added +14.9k new jobs; +8.7k full-time and +6.3k part-time.

• The number of unemployed grew by +34k.

• The employment-to-population ratio remained at 64.0%.

• Total hours worked increased by +0.5% to 1,987 million.

• S&P/ASX200 9,089 +1.1%, AUDUSD 0.6501 -0.2%, Aus 2yr 3.37% -7bps, Aus 10yr 4.17% -4bps

Fin-X View

• Despite the negative headline, the underlying employment data is relatively steady.

• One slight concern is that the growth in hours worked is decelerating as the employment-to-population ratio appears to have peaked. This could lead to broader weakness, especially if overseas growth continues to slow.

• It is unlikely that the labour data will alter the RBA rate path, which is currently priced for 1.4 cuts by the end of 2026. 

• Speaking in Washington DC - where the IMF meetings are taking place - Governor Michelle Bullock suggested that rate settings remained marginally tight, while Assistant Governor Chris Kent said in Sydney that financial conditions were gradually easing.

  
  

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