By Stella Qiu
SYDNEY, Oct 15 (Reuters) – Australian employment unexpectedly fell in September, with the jobless rate staying at a five-year high of 4.7%, data showed on Thursday, a soft result that quashed the risk of another hike in interest rates this year.
Markets now imply a nearly 90% chance the Reserve Bank of Australia will leave interest rates unchanged at 4.6% in November, up from 66% before the data, after delivering four rate hikes this year. The chance of a hike in December has fallen to just 32%, with another rate increase no longer fully priced in.
The Australian dollar fell 0.3% to $0.6953, while three-year government bond futures rallied 11 ticks to 95.19, a five-week high in part helped by a global rally in Treasuries.
Figures from the Australian Bureau of Statistics showed net employment slid 39,300 in September from August, when it rose a downwardly revised 29,300. That was the biggest monthly fall since February 2025, as part-time roles tumbled 73,700, though full-time positions climbed by 34,400.
Analysts had forecast a rise of around 20,000.
The jobless rate stayed at 4.7%, with the previous month revised up from an initial 4.6% reading. The RBA has urged caution in interpreting the monthly figures because of methodological changes to the survey, but unemployment has nevertheless climbed to a level policymakers had not expected until the end of next year.
“Firms are cutting shifts and casual hours first while holding onto full-time staff, a pattern typical of an early hiring downturn,” said Sunny Nguyen, head of Australia economics at Moody’s Analytics.
“For the RBA, this is the cooling the Board has sought… Unless the upcoming quarterly CPI surprises sharply to the upside, we expect a hold in November, with the risk tilting toward an overshoot in unemployment next year.”
The central bank has lifted interest rates four times this year to 4.6% but inflation is proving hard to tame, with headline figures picking up to 4% in August and underlying inflation failing to budge at 3.6%, both above its target band of 2% to 3%.
Thursday’s data showed the participation rate fell to 66.8%, from 67%, while underemployment edged up to 6.3% from 6.2%. Hours worked managed to eke out a small gain of 0.1%.
“For the RBA, the hurdle for an immediate hike has therefore risen materially, but we would not take further tightening off the table,” Krishna Bhimavarapu, APAC economist at State Street Investment Management, said in a note.
“The policy trade-off is becoming increasingly uncomfortable. The RBA is trying to finish the inflation fight just as the labor market is beginning to show more convincing signs of weakness.”
(Reporting by Stella Qiu and Wayne Cole; Editing by Christopher Cushing and Christian Schmollinger)
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