Australia's unemployment is stabilizing, curtailing hopes for near-term interest rate relief.
After a slight uptick, the nation's jobless rate eased to 4.3% in October, down from 4.5% the month before, according to seasonally-adjusted figures from the Australian Bureau of Statistics (ABS), which were released on Thursday.
That translates to 42,200 people in Australia who found jobs last month. Good news for jobseekers, but a mixed bag for mortgage holders and investors, many of whom were hoping for some added relief from interest rates during the Reserve Bank of Australia's (RBA) next meeting on monetary policy.
In September, Australia's 4.5% unemployment rate reached its highest levels in four years after holding steady at 4.2% in July and August, suggesting a slight loosening of the jobs market — and the potential need for the central bank to intervene.
But October's report hints at the opposite: that the labor market is plateauing after earlier signs of softening. The nation's participation rate also remained steady at 67% in October.
By state, the Northern Territory had the highest unemployment rate at 5.2%, a noticeable increase from September, when the Northern Territory's unemployment rate was 4.2%, surpassing Victoria, which held steady at 4.7% unemployment.
In October, Tasmania had the lowest levels of unemployment at 3.9%, down from 4.3% the month before, followed by Western Australia at 4.1% in October, down from 4.3% in September, in seasonally-adjusted terms.
A historically-low unemployment rate nationwide tempers expectations that the central bank will cut rates at its next policy meeting.
The RBA held the official cash rate (OCR) steady at 3.6% at its meeting earlier this month, citing rising inflation as the key driver for its decision. The move marked the second consecutive rate hold this year. The bank has slashed interest rates three times in 2025: first in February, then in May, and most recently in August.
The ongoing rate reprieve has eased pressure on homeowners and property investors alike, many of whom have been grappling with higher living costs, tight housing supply and surging property prices.
But many market players, including several of Australia’s Big Four banks, don’t expect the RBA to cut rates again until 2026 — if at all — as a result of rising inflation and increased consumer spending.
"Today’s data will likely reaffirm the [RBA's] view that the labour market remains ‘a little tight’ and reinforces our view that interest rates will be on hold for the foreseeable future," Harry Ottley, an economist at Commonwealth Bank (CBA), wrote in a note.
The economist added: "We do not expect the labour market to loosen much further and expect the cash rate to remain on hold at 3.6% in 2026."
ANZ echoed the sentiment, anticipating a hold at the RBA's next meeting.
"We do not expect the data [from Thursday's jobs report] to have a material impact on the RBA Board’s monetary policy decision in December, where we and the market expect a hold," Aaron Luk, economist at ANZ, wrote in a note. ANZ is, however, placing its bets on one final cash cut in early 2026, bringing the OCR down to 3.35%.
The September quarterly consumer price index (CPI), indicated that both headline CPI and the annual trimmed mean inflation rates are trending up.
Headline CPI rose 1.3% in the three months leading up to September, compared with June's quarterly reading of an increase of just 0.7%. For the year leading up to September, the CPI climbed to 3.2%, up from 2.1% in June.
Meanwhile, the trimmed mean annual inflation – which measures underlying inflation by stripping out goods with volatile prices changes and what many consider a better indicator of inflationary pressures – rose to 3% in September, up from 2.7% during the June reading.
Both figures were outside of the RBA's target inflation range of 2% to 3%. RBA Governor Michele Bullock has repeatedly said that any future monetary easing will depend on inflation and employment remaining at sustainable levels, with the central bank's target levels.
At the same time, consumer spending remains strong, potentially fueling further inflationary pressures.
Still, mortgage brokers around the country have said that business has never been busier, despite stagnant interest rates, driven by the government’s Home Guarantee Scheme and the ongoing housing shortage.
"The last couple of weeks have been crazy. I'm seeing an absolute flurry of activity. It's been enormous," Adele Andrews, director and broker at Australian Property Home Loans, told Australian Broker. "I don't know whether it is because of the lead-up to Christmas, or whether they're concerned about property prices going up in 2026. I think there's also a little bit of acceptance that rates aren't going to come down again for a little while. So what we've got is what we've got."
The Melbourne-based broker, who works with clients around the country, added that: "There's certainly a lot of first-home buyers coming into the market; there's no doubt about that. But there's also a lot of people looking in the market now who aren't necessarily first-home buyers, because they are worried about the impact that the housing scheme is going to have on prices and that surge of demand. So people are also looking at refinancing options. There's quite a lot of FOMO in the market."
The RBA meets next on 8 and 9 of December.
