The jobless rate climbed to 4.5% in September from an upwardly revised 4.3%, data from the Australian Bureau of Statistics showed Thursday. Employment advanced 14,900 – compared with an expected 20,000 – while the participation rate climbed to 67%.
Yields on policy-sensitive three-year government bonds slumped 11 basis points, the most since May, as traders boosted bets on further RBA easing this year. The currency slid 0.5%.
Jobs data is crucial for the RBA’s rate-setting board as the resilience of the labour market, and worries about its tightness potentially rekindling price pressures, have been among factors driving a cautious approach in the current easing cycle.
Third-quarter inflation due out in just under two weeks may make or break expectations for the November board meeting. Traders see a 70% chance of an easing next month from the current 3.6% cash rate, while most economists in a Bloomberg survey predict the RBA will lower its benchmark to 3.35%.
Last week, Governor Michele Bullock told a parliamentary committee that Australia’s economy is in a “pretty good spot” with inflation inside the central bank’s 2%-3% target band and the labour market still tight. At a forum in Washington on Wednesday, the governor characterised current policy settings as “marginally tight.”
Minutes of the RBA’s September policy meeting released this week showed the risk of faster inflation at a time when the labour market is “still a little tight” underpinned its decision to hold rates steady last month.
Australia’s labour market has been a bright spot in the economy, though it has gradually cooled since the start of the year. Global uncertainty is also elevated with the outlook clouded by the Trump administration’s tariff policies, heightened geopolitical tension and a slowdown in Chinese demand.
US treasury secretary Scott Bessent on Wednesday dangled the possibility of extending a pause of import duties on Chinese goods for longer than three months if China halts its plan for strict new export controls on rare-earth elements.
The US and China have agreed to a series of 90-day truces since earlier this year, with the next deadline looming in November.