Unemployment remains steady in Australia, suggesting the nation's jobs market is unlikely to influence interest rates in the near term.
In seasonally-adjusted terms, Australia's unemployment rate remained at 4.2% in August, the Australian Bureau of Statistics (ABS) reported on Thursday.
The participation rate edged down to 66.8%, compared with 67% in July. That equals roughly 5,400 more people without jobs, following gains of more than 26,000 in July. Nevertheless, even with a slight loosening of the employment nationwide, market players largely expect interest rates to remain unaffected in the near future.
"We don’t think today’s data will sway the market much one way or another on the November [Reserve Bank of Australia] RBA board meeting, where a rate cut is widely expected, or for that matter the coming September meeting, which should pass with no change in rates," Aaron Luk, an economist at ANZ, wrote in a note Thursday.
The major bank is anticipating the nation's central bank will leave the official cash rate (OCR) unchanged at 3.60% during its 29-30 September meeting later this month. But will slash rates by 25-basis points during the RBA's November meeting.
Economists at Commonwealth Bank (CBA) also expect the RBA to hold rates at its upcoming meeting, followed by a 25 basis point cut in November.
Harry Ottley, economist at CBA, however, called Thursday's jobs report "a mixed bag."
"But clearly [the report] sits on the soft side of consensus," Ottley said.
"The unemployment rate in trend terms ticked up to 4.3% in August," he said. "This has risen steadily from 4.0% at the start of 2025, indicating a gradual loosening of the labor market is underway after stability through 2024.But the unemployment rate is a lagging indicator, and the private economy is picking up steam. This should generate stronger employment growth than what we have seen so far this year. But this would be a 2026 story.
"If market sector employment does not pick up as quickly as we expect and take up the slack left by a slowing non‑market sector, the unemployment rate may rise more than we currently forecast," Ottley continued. "Over‑interpreting a single month can be dangerous. But even so, three of the last four months have seen soft employment growth. This makes the September release very important. Another weak print for employment growth would likely mean even the trend figures will look much softer.
"How this transition unfolds is the key risk to our view that the RBA will only deliver one further interest rate cut this cycle," the economist added.
The Reserve Bank of Australia (RBA) cut rates in August, the third rate reduction of 2025. The continued rate declines have offered a reprieve to homeowners and property investors, many of whom have been contending with rising living expenses, limited housing supply and escalating property values.
But the nation's central bank has repeatedly said it has adopted a wait-and-see approach, signaling that any further monetary policy decisions will depend on upcoming economic data. This suggests inflation and employment are tracking within manageable levels, with the RBA reaffirming its target inflation range of 2% to 3%.
While unemployment has remained historically low in Australia, the June quarterly consumer price index (CPI) confirmed that inflation continues to trend downward. Both headline CPI and trimmed mean inflation declined over the quarter, with annual CPI easing to 2.1%, down from 2.4% in the previous period, while trimmed mean inflation dipped to 2.7%, compared with 2.9% in the prior quarter.
Additionally, RBA Governor Michele Bullock suggested that stronger-than-expected consumer spending could add to inflationary pressures and delay further interest rate cuts.
Consumer spending in Australia rose two points during the last week of August, according to the latest ANZ-Roy Morgan Survey, only to fall more than three points the week ending 14 September.
The RBA's next meeting is scheduled for 29-30 September.
