The report shifts the RBA debate from when the next hike comes to whether it comes at all, with a pause now looking the likelier near-term outcome. That leaves the Australian dollar out of step with the wider market. While gold and major currencies have risen against the US dollar on lower Treasury yields, the Aussie has stayed near its post-data lows, as a narrowing rate outlook at home offsets the broader dollar weakness. Further AUD underperformance is likely on crosses such as AUD/NZD and AUD/JPY if markets keep paring RBA hike bets. The noisy nature of the data means the next release, and the RBA’s revised forecasts in November, will carry extra weight.
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Australia’s jobs market blinked in September, and with it went most of the market’s appetite for a November RBA hike.
Summary:
Employment fell 39,300 in September against expectations of a 20,000 rise. August was revised down to 29,300 from 39,500
Full-time jobs rose 34,400, while part-time jobs dropped 73,700, the weakest month in five years
Unemployment held at 4.7% (4.72% unrounded), against 4.6% expected. August was revised up to 4.7%
Participation fell to 66.8% from 67.1%, against 67.0% expected.
Hours worked rose 0.1% and underemployment edged up to 6.3%
November RBA hike pricing fell to around 15% from just under 50% earlier this month, with December near 40%
Australian three-year yields fell circa 10bp, and the Australian dollar dropped and has stayed near its lows
Australian employment unexpectedly fell in September, while the unemployment rate held at a five-year high of 4.7%, prompting traders to scale back bets on another Reserve Bank of Australia rate hike.
Data from the Australian Bureau of Statistics on Thursday showed employment dropped by 39,300 in the month, well short of forecasts for a gain of around 20,000. August’s increase was revised down to 29,300. The decline was driven entirely by part-time work, which slumped by 73,700, its weakest month in five years, while full-time employment rose by 34,400.
The unemployment rate was steady at 4.7%, above expectations of 4.6%. August’s rate was revised up to 4.7% from 4.6%, although only just: unrounded, the jobless rate was 4.72% in September against 4.65% in August. A sharp drop in the participation rate to 66.8% from 67.1%, below the 67.0% expected, limited the rise in unemployment, as fewer people were looking for work. Hours worked rose 0.1% and underemployment edged up to 6.3%.
The ABS urged caution in interpreting the seasonally adjusted figures, citing ongoing volatility in the data. That volatility comes at an awkward time for the RBA, which relies on the labour figures to judge how tighter policy is affecting the economy. The split between full-time and part-time jobs, and the swing in participation, have both been noisy from month to month.
Even so, the trend is softening. The unemployment rate averaged 4.6% over the quarter, well above the RBA’s forecast, which is likely to force the bank to revise its projections higher at its November meeting. With the RBA operating under a dual mandate of price stability and full employment, a weaker jobs market makes the risks around further tightening more balanced.
Markets moved quickly to reflect that. Pricing for a November RBA rate hike fell and markets no longer favour a hike before the first half of 2027. Australian three-year government bond yields fell circa 10 basis points.
The Australian dollar dropped on the release and has stayed near its lows, standing out against gains in gold and other major currencies as US Treasury yields have fallen.
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RBA dates this year show two more meetings to come:
This article was written by Eamonn Sheridan at investinglive.com.
