Australia’s unemployment rate jumped to its highest level in nearly four years, rising to 4.5% in September, as the latest Labour Force data from the Australian Bureau of Statistics (ABS) revealed a rise in job seekers and a cooling job market.
Unemployment Rise and Labour Data
The latest figures showed the number of unemployed Australians rose by approximately 34,000 to 684,000 people, with the unemployment rate increasing from 4.3% in August. Despite this, employment numbers still grew modestly, adding 14,900 roles, of which around 8,700 were full-time and 6,300 were part-time. The labour participation rate edged up to 67%, highlighting that more Australians are actively seeking work even as hiring momentum slows.
The ABS noted that while hours worked increased by 0.5% during September, reversing a decline in August, the broader underemployment rate also climbed to 5.9%, and the combined underutilisation rate reached 10.4%. These shifts mark a noticeable slowdown in labour market conditions compared to earlier in 2025, when employment growth was running at over 3% annually.
Reserve Bank of Australia Faces Renewed Pressure
Economists believe the weak employment data could push the Reserve Bank of Australia (RBA) toward another interest rate cut at its November meeting. Investors have increased their forecast of a rate reduction to more than 70%, with expectations that the cash rate could fall from 3.60% to around 3.35%.
The RBA previously signalled that it expected unemployment to remain stable near 4.3% through 2027, but the new 4.5% figure exceeded those forecasts. This unexpected rise comes even as inflation remains slightly above 2.7%, near the central bank’s target range, leaving policymakers with a challenge: balancing rising joblessness with sticky inflation.
Economists from Oxford Economics and KPMG described the situation as one where policymakers are “caught between opposing forces,” as easing monetary policy could stimulate spending but might also rekindle price pressures.
Market Reaction and Broader Implications
Following the jobs report, the Australian dollar dipped 0.2% to USD 0.6497, and government bond yields fell as traders anticipated an upcoming rate cut. Stock markets, in contrast, reacted positively, with the S&P/ASX 200 index climbing to a new record high due to investor optimism over looser monetary conditions.
Beyond local factors, the global environment remains uncertain, with weaker demand from China, Australia’s largest trading partner, and rising geopolitical tensions weighing on sentiment. Meanwhile, economists say the adoption of AI and automation in businesses could also be subtly limiting job creation across several sectors.
Outlook Ahead
All eyes are now on the upcoming third-quarter inflation figures due at the end of October, which may determine the RBA’s next policy move. A softer inflation reading would likely strengthen the case for a rate cut aimed at stimulating economic growth and supporting household spending.
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News At Glance
- Australia’s unemployment rate rose to 4.5% in September, the highest in nearly four years
- Around 34,000 more individuals are currently seeking employment and are unable to secure work, taking the number to 684,000 unemployed
- The nation continued adding jobs during the month, but significantly fewer than previously, indicating that the pace is slowing down
- The Reserve Bank could lower interest rates next month due to these job figures, with over 70% probability now
- The Australian dollar fell after news of this was released, but the share market actually rose
FAQs
- What is Australia’s unemployment rate today?
The unemployment rate is 4.5% as of September 2025, meaning approximately 684,000 individuals are unemployed but actively seeking employment.
- Why is there increased unemployment in Australia?
More individuals are searching for employment, but businesses aren’t hiring as frequently as before, so there isn’t sufficient employment for all those who wish to work.
- Will the Reserve Bank lower interest rates anytime soon?
Yes, most likely. Most analysts believe there’s a high possibility of the Reserve Bank reducing rates at their November board meeting due to the growing unemployment.
- How many jobs were created in September?
Around 14,900 new positions were added in September, but that’s far below the monthly average earlier in the year.
- Is unemployment set to continue increasing?
It could be. The Reserve Bank believed that unemployment would remain at 4.3%, but it’s already above that figure, so before things can improve, they could get worse.
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